Bitcoin’s CPI Bounce Snaps Back: $575M Wiped as BOJ Hike Squeezes the Yen Carry Trade

Bitcoin’s latest pop-and-drop says more about leverage and funding than inflation. Softer U.S. CPI briefly unlocked a relief bid, but derivatives traders used the strength to take profits into thin liquidity, flipping the tape and triggering another round of long liquidations.

- Headline CPI printed 2.7% and core 2.6%, both below 3% expectations. - BTC approached a retest of $90,000 before sellers reclaimed control within hours. - Across crypto, $575 million was liquidated in 24 hours, including $368 million of longs, per CoinGlass. Bitcoin accounted for $202 million, with $119 million in long-side liquidations. - The $85,000–$81,000 band continues to attract bids. BTC is up nearly 1% on the day, trading around $88,100, according to CoinGecko. - On Myriad, a prediction market owned by Dastan, traders place a 61% probability on Bitcoin’s next major move targeting $100,000 over $69,000.

The pivot worth focusing on is the funding regime. The Bank of Japan just raised rates by 25 basis points—the first increase in three decades—putting stress on the yen carry trade that has lubricated risk assets for years. When a core source of cheap funding tightens, systematic de-leveraging tends to propagate across global markets. Crypto, with perpetual swaps and 24/7 collateral re-marking, is often the quickest to reflect that withdrawal of liquidity.

This is why the microstructure matters. Velo’s data shows the latest downdraft came from derivatives profit-taking, in contrast to the prior whipsaw that was driven by spot sellers. That shift tells you two things: momentum longs have been crowding into strength, and sophisticated traders are actively fading rallies while funding and liquidity conditions are unstable. Coinalyze highlights the same bias—optimistic long positioning has been a major contributor to December’s wipeouts, with four separate days this month where industry-wide liquidations topped $500 million.

Psychologically, the “buy-the-dip” reflex remains intact in the $85,000–$81,000 zone, but it is clashing with a growing preference for defensive positioning in futures and options. As holidays approach and order books thin, that interaction becomes reflexive: lower spot demand and hedged derivatives flows can magnify small impulses into outsized moves.

From a business standpoint, exchanges earn through churn while liquidation engines enforce discipline, but the cost is confidence erosion among over-levered participants. Technologically, the perps/funding loop accelerates these cycles—funding turns, open interest builds, and the next macro headline forces an abrupt rebalance.

What I’m watching: - Funding rates, OI, and basis into year-end; sustained positive funding alongside soft spot demand invites further squeezes both ways. - Yen volatility and cross-asset risk appetite; continued pressure on the carry trade tends to bleed into crypto risk premia. - The $85K–$81K demand shelf; repeated defense there keeps path-to-$90K open, but a clean break risks a faster de-leveraging cascade.

Softer CPI offered a window; the BOJ shut some of it. Until leverage normalizes and the yen carry backdrop stabilizes, traders should expect more intraday regime flips than trend follow-through.