December Crypto Bloodbath: When Hawkish Central Bank Signals Trigger a Risk-Off Avalanche

The crypto market is facing a perfect storm. A hawkish signal from Bank of Japan Governor Kazuo Ueda—hinting at interest rate increases if economic data cooperates—has ignited a global risk-off sentiment, pulling Bitcoin (BTC), Ethereum (ETH), and XRP down sharply as December opens with weakness. The culprit: fears of a Yen carry trade unwind, a scenario where investors unwind leveraged positions funded in cheap Yen, draining liquidity from riskier assets like cryptocurrencies.

The Macro Trigger: Why Central Banks Matter to Crypto

The broader story here isn’t just about crypto—it’s about how interconnected global markets have become. When a major central bank like the BoJ shifts its tone, it sends ripples across all risk assets. The Yen carry trade has been a hidden pillar supporting risk appetite for years. If that unwinds, capital flows reverse direction, and crypto—being the riskiest asset class—gets hit first and hardest. This Monday’s 4%+ declines across major cryptocurrencies aren’t random; they’re a direct consequence of this macro shift.

Bitcoin: From Rally Resistance to Correction Reality

Bitcoin is now trading around $87.70K, having surrendered the $87,000 level that bulls desperately tried to defend. The damage extends beyond just price action. The daily Relative Strength Index (RSI) has dipped to 33, signaling that selling pressure is building while buying interest is fading—a dangerous combination for bulls.

The technical picture is deteriorating. The MACD is threatening a bearish crossover, and stocks with RSI below 30 today are typically associated with capitulation-style selling. BTC’s momentum indicators suggest we’re transitioning from a shakeout into a bona fide correction.

Downside roadmap for bears:

• Immediate target: November 21 low at $80,600
• Extended target: April 7 low at $74,508 (a far more painful reset)

Conversely, if the FOMC delivers a dovish surprise or macro data softens, a relief rally back toward $90,000 could materialize quickly. The key is watching whether $80,600 holds as support—if not, BTC is looking at a significantly deeper pullback.

Ethereum: Supply-Demand Imbalance at the $2,800 Pivot

Ethereum has shed roughly 5%, trading at $2.95K as sellers overwhelm buyers at the critical $2,800 demand zone. What’s telling here is that buyers aren’t sparking short-covering rallies—they’re simply absorbing heavy selling without conviction.

The November 21 low at $2,623 is the line in the sand. If ETH closes below this level on the daily chart, the recent consolidation range is invalidated, and the path opens toward the June 22 low at $2,111—a potential drop that would wipe out much of the recent recovery gains.

Like Bitcoin, Ethereum’s MACD is on the edge of a bearish cross, indicating that sellers are tightening their grip on the structure. The setup mirrors Bitcoin’s precarious situation: momentum is rolling over just as price approaches key support zones.

XRP: Psychological $2.00 Under Siege

XRP is down over 4% and clinging to the psychological $2.00 handle like a lifeline. Currently trading at $1.86, the token is uncomfortably close to this round number—and bears are circling.

For the bears, the play is simple:

• Target the $1.90 support (the June 22 low)
• A breach erases most of the recent breakout gains

For the bulls, there’s a sliver of hope:

• A reversal here could spark a rebound toward the descending resistance trendline near $2.20
• However, the daily RSI at 40 shows rising selling pressure with ample room to go lower before conditions become oversold

The Bigger Picture: What Comes Next?

The immediate question is whether this macro-driven selloff transitions into a deeper correction or remains a shakeout. With the BoJ signaling rate hikes, interest rate traders will likely remain defensive, keeping downward pressure on risk assets in the near term.

Key levels to watch:

• BTC support zone: $80,600 (below this, $74,508 becomes increasingly likely)
• ETH support zone: $2,623 (below this, flushing to $2,111 is on the table)
• XRP support zone: $1.90 (psychological and technical barrier)

Until we see signs of capitulation or a dramatic shift in macro sentiment, expect the correction to grind lower. The silver lining: oversold indicators like RSI below 30 have historically preceded sharp recoveries—so position traders waiting for the turning point shouldn’t give up hope entirely.