On December 2, the crypto market seemed to hit both the pause and the gas pedal—first, Bitcoin led a sharp drop, at one point falling below $84,000 and evaporating over 8% in just 24 hours. The total crypto market cap also slipped below the $3 trillion mark. Even worse, the total amount liquidated across the network reached $974 million, wiping out over 260,000 accounts, with long positions alone accounting for $851 million of the liquidations.

What triggered this bloodbath? The Bank of Japan suddenly hinted that it might raise interest rates in December, causing the USD/JPY exchange rate to fluctuate wildly between 155 and 160. This hawkish signal instantly tightened global liquidity expectations, causing risk assets to suffer across the board. The co-founder of Threshold Network put it bluntly: the Bank of Japan’s move shook the very foundation of all risk assets.

Before the market panic had even subsided, rumors spread that Strategy Company might face a liquidity crunch due to the weak Bitcoin price and could be forced to sell its holdings to pay dividends. Fortunately, the company quickly issued a statement clarifying that it had prepared $1.44 billion in reserves (from the sale of Class A common stock) with the goal of maintaining at least 12 months of dividend payment capability—and even plans to establish a cash buffer for more than 24 months.

But the trouble didn’t stop there. S&P Global Ratings suddenly downgraded USDT’s stability rating, warning that further Bitcoin price drops could result in insufficient collateral. Arthur Hayes went even further with a shocking statement: “If gold and BTC positions drop 30%, USDT becomes insolvent.” However, Tether’s CEO quickly fired back, emphasizing that the group’s own equity is close to $30 billion and that S&P’s assessment did not account for extra equity or profits from government bond yields.

The macro environment isn’t offering any relief either. Short-term rate cut expectations have vanished, inflation data remains stubborn, the job market is weakening, geopolitical risks are rising, and consumer pressure is mounting—all these factors combined have led to an overall slump in risk assets over the past two months. The founder of Cardiff put it bluntly: with the Fed meeting approaching and inflation data still unclear, institutional investors don’t dare touch such a volatile asset as Bitcoin—no one wants to get slammed again if Powell turns hawkish.

The storm on December 2 starkly exposed the fragility of the crypto market. What comes next? Everyone is waiting for the answer.