Why is it said that the bottom of the crypto market may have already passed?

The article argues that the recent cryptocurrency market downturn is likely not caused by a large-scale unwinding of yen carry trades, as some fear, but by routine year-end institutional and algorithmic activities.

Debunking the "Yen Carry Trade" Panic: Two key flaws challenge this narrative: the yen's value did not surge as expected during the sell-off, and excessive leverage from earlier in the year was largely wiped out in August, meaning traders did not re-enter with the same intensity.
The Real Cause: Year-End Mechanics: The decline is attributed to predictable December activities like institutional portfolio rebalancing, tax-loss harvesting, and automated risk resets. This leads to coordinated, mechanical selling of underperforming assets (like Bitcoin) rather than panic-driven liquidation.
Market Outlook and Key Levels: Bitcoin faces volatility after hitting resistance, but the market structure is considered intact if it holds above $80,000-$82,000. The week's major macroeconomic data releases (including speeches and employment reports) are expected to cause further fluctuations, but the worst of the leverage-driven cleanup is likely over.

Author: Alertforalpha

Compiled by: Plain Language Blockchain

Are yen carry trades being closed out again? Is this the reason for the cryptocurrency crash?

If you've been scrolling through social media today, you've probably seen the panic. Everyone's saying this is another repeat of August 2024.

But the reality is: things may not be as you imagine.

Why might it not be a yen carry trade?

The narrative is simple: investors buy cheap yen to purchase high-yield borrowing assets (such as US tech stocks or cryptocurrencies).

Now, with Japanese bonds surging, they are forced to sell these assets for yen.

That sounds scary, doesn't it?

However, this theory has two major flaws.

1. The yen has no peak.

If everyone rushes to buy back yen to repay loans, the yen's value against the dollar should skyrocket.

But it didn't.

It is basically the same as last week.

2. The lever has disappeared.

A macro analyst—someone who has spent his entire career trading yen—pointed out a few months ago that most of the reckless leverage had already been wiped out in the August crash.

The traders suffered heavy losses and did not re-enter the same trades with the same intensity.

So, if it's not a large-scale global liquidation, is that a document?

The real culprits: algorithms and calendars

The most boring explanation is usually the right one.

We've just turned to the December calendar. This is the prime time to do the following:

Institutional rebalancing
Tax-loss Harting
Automated Risk Resets
"Algorithm cleaning" (The "Algo Flush")

As the new month approaches midnight (UTC time), adjustments are likely to trigger sell orders to reset hedging and adjust risk inventory.

This isn't emotional; it's mechanical.

Institutions are selling underperforming assets (such as Bitcoin, which they bought at high prices) in order to consider gains in other directions before the end of the year.

This explains why the sell-off was coordinated and mechanized—because that's how it is.

What to focus on next?

Bitcoin encountered resistance at the daily Bollinger Band moving average, leading to this period of volatility.

But as long as we hold the $80,000-$82,000 level, the structure remains intact.

This week is filled with macroeconomic data:

Monday: Jerome Powell's speech
Wednesday: ADP Unemployment Statistics and ISM Services PMI
Friday: PCE expansion and data employment

Fluctuations are expected.

But don't let the image of a "yen panic" scare you into selling your positions.

The worst of the leverage cleanup may be over.