Bitcoin Falls Below $86K as Crypto Market Drops on BOJ Rate Hike Fears, Yearn $9M Exploit
Key Takeaways
- The crypto market recorded $400 million in liquidations in under two hours as the market responded to reports that the Bank of Japan (BOJ) could be ending its long-running zero interest rate era, beginning quantitative tightening.
- BTC and ETH recorded nearly 6% losses in 24 hours, as their prices dropped below $86,000 and $2,900 during Asian trading hours. This decline wiped out nearly 4% of the total crypto market cap, which currently sits at $3.04 trillion.
- DeFi aggregator and Ethereum liquid staking protocol Yearn Finance was hacked for $9 million on Sunday. The hacker exploited a vulnerability in its yETH liquidity pool to make unauthorized yETH mints and drain 1,000 ETH, which was routed through token mixer platforms.
Bitcoin (BTC), Ether (ETH), and the broader cryptocurrency market slipped early Monday, as macroeconomic pressures and a major DeFi breach drove investors towards risk-off positions, wiping out last week’s gains.
The fast sell-off event triggered $400 million in liquidations across the market within just 60 minutes, pushing the total crypto market capitalization down 4% to $3.04 trillion. This drawdown has extended November’s bruise to the final month of the year.
BTC Falls Under $86,000 as Bank of Japan Considers Interest Rate Hike, Triggering Market-wide Liquidations
BTC lost nearly 5% of its value to drop below $86,500 during Asian trading hours. The world’s largest crypto by market value plunged from $91,300 to $87,000 in under three hours. This has pulled bitcoin back to levels last observed in mid-November, wiping out its five-day recovery above $90,000.
Other leading cryptocurrencies also registered notable declines over the last 24 hours, as ETH dropped 5.36% to $2,827, XRP fell 6.39% to $2.05, and Solana (SOL) saw its price dip 6.41% to $124.
The key catalyst behind the overall decline is Japan’s 2-year government bond yield touching 1.01% – its highest level since 2008. Traders are anticipating that the Bank of Japan’s (BOJ) long-standing near-zero interest rate era could be coming to an end. Comments made by BOJ Governor Kazuo Ueda that the central bank’s board will evaluate whether a rate hike is necessary in the coming months further amplified the sell-off that followed.
Traders pushed up the Japanese yen’s price during the Tokyo stock exchange’s morning session. This will eventually accelerate an unwinding of yen-funded carry trades that have supported risk assets throughout the year. The crypto market, which is deeply sensitive to short-term liquidity conditions in Asia, bore the brunt of the potential BOJ policy change.
Bettors on Polymarket are now pricing the chances of a December rate hike by the BOJ at roughly 50%, up 7% from last month’s levels. This week, traders will focus on the yen’s movements and the upcoming meeting of the central bank’s governors. Any further tightening could signal further volatility across the crypto market.
Market-wide trading activity surged as both retail and institutional investors reacted to the price pressure. The total trading volume was above $110 billion as investors adjusted their holdings.
Yearn Finance Suffers $9 Million Exploit on ETH Liquid Staking Pool
The sell-off was accelerated after leading Decentralized Finance aggregator protocol Yearn Finance reported a breach on its Ethereum liquidity pool. Blockchain sleuths discovered that attackers exploited a vulnerability on Yearn’s yETH liquidity pool to mint vast amounts of ETH tokens in a single transaction and drain 1,000 ETH ($3 million), which was then routed through the token mixer Tornado Cash.
The Ethereum liquid staking platform lost a total of $9 million in the exploit, with the hackers’ address retaining approximately $6 million of the stolen ETH and related assets. This incident comes days after South Korean crypto exchange Upbit suffered a $30 million hack.
Analysts noted that, given Yearn Finance’s role as an aggregator platform that moves funds amongst Aave, Compound, and Curve, it is likely that traders could be in panic mode, resulting in more unstaking and withdrawals that could exacerbate the sell-off.
November Marks Weakest Month for Bitcoin and Ether Since Early 2025 as Institutional Demand Falls
November was the weakest month for the crypto market, with BTC ending the previous 30 days with a 17.5% loss – the biggest since March. Even though prices slightly recovered from nearly $80,000 to over $90,000 during the final week, it was not enough to fully reverse the bear market sentiment. Meanwhile, ETH fell 22% to register its worst performance since February, as the second-largest crypto by market value dipped under $3,000.
This dour performance came as institutional demand for the legacy cryptos weakened significantly. U.S.-listed spot Bitcoin ETFs recorded $3.48 billion in net outflows last month, the second-largest monthly redemption since their launch. Meanwhile, the U.S.-listed spot Ether ETFs recorded $1.42 billion in November outflows.
Bitcoin dominance rose 0.12% in seven days to hit 58.61%, while the Altcoin Season Index reading of 23/100 suggests weakening altcoin momentum. The altcoin index has fallen 30.3% in 30 days, with the decline linked to ETH’s dominance dipping 0.95% during that period. This means investors continue to favor BTC’s liquidity and stability against altcoins’ perceived volatility during market uncertainty.
At the time of writing, Bitcoin (BTC) is trading at $85,984 – down 5.32% in 24 hours. Meanwhile, Ether (ETH) is changing hands at $2,828 – down 5.49% in the same timeframe.
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