The price of Bitcoin has sharply dropped from its record levels around $120,000 USD to $91,000 USD, marking one of the most significant corrections of the current cycle. This nearly 25% decline has worried both experienced investors and the general public, especially in Japan, where the crypto market is highly regulated and widely adopted.
Unlike small fluctuations, this plunge is the result of multiple factors acting simultaneously, creating a chain reaction of selling pressure. In this article, we explain — clearly and accessibly — why Bitcoin has crashed, including the impact of the Japanese market.
1. Profit-taking by large investors: the beginning of the decline
When Bitcoin reached the $120,000 level, many institutional investors and large holders (“whales”) began to take profits.
This typically triggers a sequence like:
- Whales sell part of their holdings
- Price starts to drop
- Other investors follow the selling trend
- Downward momentum accelerates
This initial wave of selling created market-wide pressure and opened the door to a deeper correction.
2. Massive liquidations in the futures market intensified the crash
Bitcoin’s futures and derivatives markets involve billions of dollars in leveraged positions. When the price drops quickly, these leveraged trades get automatically liquidated.
Liquidations create additional selling pressure because:
- High-leverage positions trigger forced sell orders
- Forced selling pushes the price further down
- More stop-loss and liquidation orders get activated
- The crash becomes self-reinforcing
During this decline, a cascade of liquidations contributed significantly to the sudden drop from ~$110K to ~$95K within hours.
3. The Federal Reserve’s policies: tighter monetary conditions weaken Bitcoin
Bitcoin is highly sensitive to global monetary conditions, especially to the U.S. Federal Reserve (FED).
Recently, the FED signaled that:
- Interest rates may remain high longer
- Monetary tightening will continue to fight inflation
This caused institutional investors to reduce exposure to risky assets.
As a result:
✔️ Demand for Bitcoin decreased
✔️ The U.S. dollar strengthened
✔️ Risk appetite fell across global markets
Monetary tightening is historically bearish for Bitcoin, and this time was no exception.
4. Global regulatory pressure: uncertainty spreads across markets
Regulation is one of Bitcoin’s biggest price drivers. Several developments worldwide created fear and uncertainty:
United States
- Potential restrictions on stablecoins
- Investigations into major exchanges
- New regulatory proposals for DeFi platforms
European Union (MiCA)
- Stricter rules for custodians
- Strong transparency requirements for exchanges
Asia
- China reiterating strong crypto restrictions
- South Korea preparing higher crypto taxation
Together, these regulatory concerns weakened investor sentiment and contributed to the sell-off.
5. Japan’s market influence: weak yen, stricter oversight, and investor caution
Japan — one of the world’s most regulated and active crypto markets — also had a measurable impact on Bitcoin’s decline.
A. The historic weakness of the Japanese yen
A very weak yen makes Bitcoin appear “expensive” for Japanese investors.
Consequences:
- BTC becomes harder to buy in yen terms
- Retail investors reduce buying activity
- Some investors sell to secure profits
Japan accounts for a significant portion of Asian crypto volume, so this had a global effect.
B. Stricter supervision by the FSA
The Financial Services Agency (FSA) tightened oversight on exchanges:
- More audits
- Liquidity requirements
- Updates to custody rules
This caused Japanese investors to adopt a more cautious, risk-off stance, leading to increased selling.
C. Japanese household behavior
Due to inflation and rising living costs, many Japanese retail investors temporarily reduced exposure to volatile assets such as Bitcoin.
Japan’s influence wasn’t the main cause of the crash, but it amplified selling pressure in Asia.
6. Rumors about exchanges and security concerns triggered panic
In the crypto market, rumors alone can spark panic.
During this decline, several unverified claims circulated:
- Liquidity problems at a major Asian exchange
- Regulatory issues with European exchanges
- Suspicious large wallet movements
Though none were fully confirmed, they shook investor confidence, accelerating the drop toward $90K.
7. Market psychology: fear, panic, and herd behavior
Bitcoin is highly sensitive to emotional sentiment.
When prices fall rapidly:
- Stop-losses are triggered
- Retail investors panic-sell
- Liquidity dries up
- Selling pressure leads to more selling
This psychological chain reaction was a major factor in the final plunge to $91,000 USD.
Conclusion: A typical crypto crash driven by multiple overlapping factors
Bitcoin’s drop from $120,000 to $91,000 was caused by a combination of:
✔ Profit-taking by whales
✔ Massive futures liquidations
✔ FED tightening monetary policy
✔ Regulatory pressure worldwide
✔ Exchange-related fears
✔ Negative investor sentiment
✔ Market effects from Japan (weak yen, strict FSA, lower retail inflow)
This is the type of sharp correction commonly seen in strong bull markets.
Throughout Bitcoin’s history, deep corrections have often occurred even during upward cycles, followed by new recoveries.
Whether Bitcoin rebounds or continues to correct will depend on:
- Global liquidity conditions
- Central bank policies
- Investor sentiment
- Regulatory developments
For now, the drop to $91K is best understood as a multi-factor correction, not necessarily the end of the long-term trend.
