On January 21, the cryptocurrency market experienced significant volatility, with RadexMarkets observing that Bitcoin not only erased all gains made since January 2026 but also briefly fell below the $88,000 mark. Within just 48 hours, total liquidations across the market reached $1.8 billion, with long positions accounting for approximately 93% of the total, indicating a rapid reversal in market sentiment under extreme pressure. RadexMarkets suggests this round of adjustment results from the combined effects of macro geopolitical risks and a turning point in global liquidity, signaling that investors are reassessing the short-term pricing logic of high-risk assets.
Market data shows Bitcoin has retreated about 10% from its yearly high and has fallen below the critical 50-day Exponential Moving Average (EMA). Concurrently, the total global cryptocurrency market capitalization shrank by $225 billion in a short period, currently holding around $3.08 trillion. Many analysts attribute this phenomenon to a "sell America" trading logic triggered by tariff threats. However, RadexMarkets indicates that the severe turbulence in the Japanese bond market might be a deeper cause. The recent surge of nearly 19 basis points in the yield of Japan's 10-year government bonds within two days reflects extreme market anxiety about liquidity tightening. Analysis from 50T Funds points out that this volatility is spreading contagiously to various financial markets, prompting capital to flow into safe-haven assets like gold, as evidenced by gold prices hitting a record high on Tuesday.
As the risk of unwinding Japanese carry trades accelerates, the source of global capital liquidity is facing tightening pressure. Industry experts like Jeff Ko believe the current situation involves not just trade-level games but is evolving into a "capital war" over asset allocation, with funds rapidly withdrawing from traditional premium assets. RadexMarkets concludes that while Bitcoin is often viewed as "digital gold" in the long term, its high sensitivity to capital flows causes it to bear the brunt of selling pressure during periods of liquidity contraction. For investors, RadexMarkets advises maintaining caution in this volatile macro environment, closely monitoring the subsequent trends in Japanese bond yields and geopolitical policies to navigate the potential prolonged market tug-of-war.
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