Data from TradingView shows Bitcoin briefly dipping to $87,600 on Coinbase, marking its lowest level in nearly two weeks. Although prices rebounded toward $89,000 shortly after, the sudden move reinforced a pattern of sharp weekend declines that traders have grown accustomed to in recent weeks.

Bitcoin Slides to Two-Week Low as Volatility Returns

The dip to $87,600 represents Bitcoin’s weakest price action since early December, when the asset was recovering from a deeper pullback toward $84,000. Despite the brief nature of the decline, the move unsettled short-term traders and triggered renewed discussions around downside risk.

Weekend volatility has become increasingly common, particularly during periods of thin liquidity. As a result, even modest selling pressure can push prices lower quickly before buyers step back in.

At the time of writing, Bitcoin had managed to reclaim ground above $89,000. However, traders remain cautious, watching whether the recovery can hold into the new trading week.

Saylor Signals Another Strategy Bitcoin Purchase

Amid the price drop, Michael Saylor posted a familiar message on X, writing “Back to More Orange Dots” alongside a portfolio chart. The phrase has become widely associated with Strategy’s Bitcoin accumulation strategy.

According to SaylorTracker data, Strategy’s most recent Bitcoin purchase occurred on Dec. 12, when the firm acquired 10,624 BTC. That transaction marked its largest buy since late July, reinforcing the company’s long-term conviction.

Strategy currently holds approximately 660,624 BTC, valued at around $58.5 billion based on current market prices. With an average acquisition cost of $74,696 per coin, the firm remains comfortably in profit despite recent market turbulence.

Japan Rate Expectations Fuel Selling Pressure Debate

Some analysts believe the renewed selling pressure may be linked to expectations surrounding the Bank of Japan’s upcoming interest rate decision. Market participants are increasingly focused on Japan’s role in global liquidity conditions.

Analyst NoLimit warned that Japan’s previous rate hikes have coincided with sharp Bitcoin corrections. They highlighted Japan’s position as the largest holder of U.S. debt, suggesting that shifts in its monetary policy can ripple across global risk assets.

Polymarket data currently assigns a 98% probability to a 0.25% rate hike by the Bank of Japan later this week. This expectation has fueled concerns about a potential carry trade unwind.

However, not all analysts agree. Sykodelic argued that markets have already priced in Japan’s move, emphasizing that prices tend to react ahead of known events rather than after they occur.

Justin d’Anethan of Arctic Digital echoed this view, suggesting Bitcoin may remain range-bound between $80,000 and $100,000. According to d’Anethan, traders are now waiting for a stronger catalyst to break the current consolidation phase.

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During Asian trading hours on Friday, BTC jumped beyond $64,000; later, it somewhat dipped as the BoJ’s maintained policy served to stabilize markets, thereby preventing a repeat of July’s market turbulence following its unexpected rate rise.

Positive macroeconomic forecasts, according to market professionals, are encouraging optimism for more volatile assets like Bitcoin. Classic recession indicator, the inverted U.S. 2-year/10-year Treasury spread, has lately sharpened to +8 basis points, according to traders at QCP Capital. This points to a shift toward risk-on assets and more general market optimism.

Generally speaking, about future economic downfall, short-term debt displays more than long-term debt suggests. But the steepening points of the growing spread signal to a more positive view, hence lowering worries about a possible economic catastrophe.

Since Tuesday, open interest in Bitcoin has climbed almost $5 billion, suggesting fresh money entering the market as traders predict further volatility. Information using CoinGlass usually lured toward long positions, traders are driven by aggressive purchasing volume, which has always exceeded selling volume and suggests increasing confidence in continuous upward price momentum.

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According to analysts, the ongoing unwinding of Japan-related carry trades could heighten risks for BTC. Although the leading cryptocurrency surged to $58,000 earlier this week, it failed to inspire confidence. Factors like the absence of crypto discussions in the Trump-Harris debate and Trump’s sliding poll numbers have also contributed to Bitcoin’s price fluctuation.

Amid these events, Arthur Hayes delivered a bold message on the X platform, warning his followers:

“The USD/JPY pair is breaking down, heading towards 140. Markets are turning into a ghost town again. Let’s see if BTC can hold on.”

Will Bitcoin Decline as the Yen Strengthens?

Experts suggest that alongside the U.S. elections, the ongoing unwinding of carry trades—which triggered a $49,000 drop in Bitcoin at the start of August—could persist and continue to impact BTC.

In carry trades, investors borrow in low or zero-interest currencies to invest in higher-yield assets. When the Bank of Japan raised interest rates for the first time in August, it led to a massive unwinding of carry trades and caused turmoil in global markets. Hayes is concerned that the “crash” witnessed in August may happen again.

Yardeni Research noted:

“Expectations that the Fed will lower interest rates while the Bank of Japan raises them are strengthening the yen, forcing investors to unwind their carry trades.”

Yardeni also mentioned that if the Fed cuts rates by 50 basis points and adopts a looser monetary policy, carry trade activity may persist.

In summary, the strengthening yen and continued unwinding of carry trades could put further pressure on Bitcoin. Investors should remain cautious amid these potential risks.

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Bank of Japan’s Stance on Interest Rates

Kazuo Ueda, the Governor of the BOJ, reiterated the central bank’s commitment to raising interest rates further if economic and inflationary conditions develop as expected. This statement was made in a document filed with a government panel led by Prime Minister Fumio Kishida. Ueda highlighted that despite the recent increase in the benchmark borrowing cost in late July—the first in decades—the economic environment remains accommodative, with inflation-adjusted interest rates still negative.

Might interest you: Former CEO of BitMEX Explains Why Upcoming Fed Rate Cuts May Not Boost Bitcoin Prices

Ueda’s comments led to a rally in the yen, with the USD/JPY pair dropping from 147 to 145.85. At the same time, futures tied to the S&P 500 slipped by 0.5%, and Bitcoin (BTC) experienced a 0.4% decline, falling to $58,920. These movements reflect the market’s response to the prospect of tighter monetary policy from the BOJ.

Impact of Bank of Japan-Fed Policy Divergence

The BOJ’s plans to tighten monetary policy pose a challenge for risk assets, particularly as the U.S. Federal Reserve is likely to begin cutting rates in September, with other central banks expected to follow suit in the coming months. This divergence means the yen could strengthen against most currencies, including the dollar. As a result, traders might be forced to sell riskier investments and repay their yen-denominated loans, particularly in the context of the yen carry trade.

The unwinding of yen carry trades—where investors borrow in yen to invest in higher-yielding assets—has already caused significant market volatility. In early August, this unwinding contributed to BTC’s slide from $70,000 to $50,000, highlighting the interconnected nature of global financial markets.

Expert Opinions About Bank of Japan’s Rate Rise

Arthur Hayes, co-founder and former CEO of BitMEX and current Chief Investment Officer at Maelstrom, has commented on the implications of this divergence in monetary policy. Hayes noted that while the anticipated rate cuts by the Fed, Bank of England (BOE), and European Central Bank (ECB) could initially boost markets due to cheaper money, these cuts would also reduce the interest rate differential between these currencies and the yen. This reduction could trigger a renewed unwinding of yen carry trades, potentially disrupting markets unless offset by central bank balance sheet expansion, or “money printing.”

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Why Is Bitcoin Dropping?

There are at least three significant reasons behind this decline. Firstly, short-term traders have taken control of the order books. These investors, who quickly sell at minor profits, have lost faith in the rally—at least temporarily. Market sentiment is at its lowest point in recent memory. Secondly, September has historically been a tough month for returns. Investors, recalling past years, have braced for new lows even before the month began.

Lastly, recent statements from the Bank of Japan indicate the possibility of further interest rate hikes. If Japan, after raising rates for the first time in 20 years, suggests that more increases are on the horizon, it spells bad news for risk assets.

Should BTC close below $57,130, we could see it establish new lows between $54,084 and $50,537.

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The post Breaking News: BTC Falls Below $58,000 Again—Here’s Why appeared first on Coin Engineer.

Speaking at a business conference, Uchida said, “There is sharp volatility in both domestic and overseas markets. Under such circumstances, it is better to maintain the current level of monetary easing.” The comments came after a period of intense market turbulence triggered by the BoJ’s previous policy decision to tighten monetary policy.

Last week, the BoJ surprised markets by announcing a reduction in its massive bond-buying program and a slight increase in interest rates. The unexpected move, coupled with growing concerns about a US recession, sent shockwaves through global financial markets, including cryptocurrencies. Bitcoin, for example, plummeted to around $49,000.

However, Uchida’s latest remarks have helped to calm investors’ fears. Following his comments, the Nikkei index surged by 3%, and Bitcoin rebounded to above $57,000. The Japanese yen also weakened against the US dollar.

Uchida emphasized that the BoJ would closely monitor the impact of market volatility and that a single US economic data point could have a disproportionate effect on market sentiment. His comments suggest that the central bank is in no rush to tighten monetary policy further.

While BoJ Governor Kazuo Ueda has hinted at the possibility of additional rate hikes this year, Uchida’s remarks have tempered expectations.

The BoJ’s initial policy shift had sparked concerns about a global tightening of monetary policy, which could potentially lead to a recession. However, the central bank’s latest comments have helped to alleviate these fears.

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