Analysis: Market expectations of a 25 basis point rate hike by the Bank of Japan on Friday, along with uncertainties surrounding the next Chair of the Federal Reserve, contributed to the Bitcoin price drop.

BlockBeats News, December 16th: Bitcoin briefly dropped below $86,000, experiencing a more than 3% decline in a 24-hour period. In the past 24 hours, the total liquidation across the network reached $594 million, with long positions liquidated accounting for $497 million. Globally, 178,874 people were liquidated.

The Bank of Japan plans to announce its interest rate decision on December 19th (Friday), with the market expecting a 25 basis point hike by the Bank of Japan in December. Several macro analysts believe that if the Bank of Japan follows through with the expected rate hike on December 19th, Bitcoin may further retreat to the $70,000 level. Analyst AndrewBTC stated that based on historical data, since 2024, every rate hike by the Bank of Japan has been accompanied by a Bitcoin price drop of over 20%. For example, in March 2024, there was a drop of around 23%, in July 2024 around 26%, and in January 2025 around 31%. If the Bank of Japan raises rates next week, similar downside risks may reappear.

Furthermore, former Federal Reserve Governor Kevin Warsh has surged ahead of Hassett in the probability of becoming the next Federal Reserve Chair, taking the top spot. On the prediction market Polymarket, Warsh's probability of being nominated by Trump as Federal Reserve Chair has risen from 7% to 48%, while the probability of Kevin Hassett, Director of the U.S. National Economic Council, being nominated has dropped from a peak of 85% to 42%. Wintermute stated that risk assets are showing signs of fatigue and indicated that stocks and digital tokens are both "digesting macro uncertainty rather than entering a sustained flight-to-safety phase."

Analyst De Maere stated that a key factor putting pressure on the market was last week's Federal Reserve interest rate meeting. Although the meeting lowered rates by 25 basis points as widely expected by the market, the forward guidance notably shifted to caution: the Fed's latest projections indicate only one rate cut for the full year of 2026, a much slower pace than many investors' previous pricing expectations. Currently, the market is still betting on nearly three rate cuts next year, creating a clear discrepancy between investors' expectations and the policy signals released by the central bank.