Bitcoin crashed below $78,000 Monday, vaporizing $80 billion in market value and triggering $980 million in derivatives liquidations. The slide happened even as the CLARITY Act advanced toward a Senate vote, shattering hopes that regulatory progress would lift the asset.
Treasury Yields Squeeze Risk Assets
US 10-year yields jumped to 4.62% while the 30-year neared 5.14%, making bonds far more appealing. This crushed Bitcoin as a risk asset. Japanese yields spiked too—the 30-year hit a record high while the 10-year reached late 1990s levels. USD/JPY traded at 158.50, just below Tokyo's intervention trigger point. That nears a threshold that usually sparks yen carry trade unwinds.
Over-Leverage Meets Options Wall
Traders were dangerously overextended when $4.2 billion in IBIT options expired Monday. The timing exposed crowded long positions. That removed mechanical buying support that had propped prices up. Weak ETF demand made things worse. It's the third major liquidation wave this month.
Fed Hike Odds Flip Suddenly
Markets now give 55% odds of a 25 basis point Fed rate hike by January 2027. This reversed earlier cut expectations completely. Higher rates for longer are a cold reality for crypto markets. The shift started Tuesday when new inflation data landed.
CLARITY Act's Cold Reception
The Senate advancement of the CLARITY Act should have cheered investors. It didn't. The timing isn't great with macro headwinds piling up. This follows two prior regulatory wins where Bitcoin sold off immediately after passage. Regulators' next committee hearing is Thursday, but most traders are ignoring it for now.
Japanese authorities are watching USD/JPY closely. intervention is likely if it breaches 159 overnight.
