Which macro events drove the selloff?

TLDR

The selloff was driven by Bank of Japan rate?hike fears, a hawkish?leaning Fed path that kept yields and the dollar firm, and a tech?led equity wobble ahead of key data.

1. BOJ carry?trade risk: rate hike expectations raised de?risking across risk assets. See the yen?carry linkage in a market recap. BOJ fears
2. Fed path and yields: a rate cut with cautious guidance left risk on a tighter leash as rising Treasury yields dampened appetite.
3. Equities and calendar: tech weakness spilled into crypto while CPI/PPI and the Fed meeting kept uncertainty high. Tech sell?off, CPI and PPI timing

Deep Dive

1. BOJ Carry Unwind Risk

Markets braced for a Bank of Japan move, which threatens the yen carry trade that has long lubricated global risk.

1. Coverage tied the drawdown to rate hike expectations that can unwind carry positioning and pull liquidity from risk assets. BOJ fears
2. Traders specifically watched the Dec 1819 BOJ meeting window as a volatility catalyst. BOJ schedule
3. When carry trades reverse, forced deleveraging can amplify crypto moves through thin weekend or late?session liquidity. Market recap

2. Fed Guidance, Yields and Dollar

A December Fed cut came with cautious forward guidance, keeping macro conditions tighter than bulls hoped.

1. Markets noted that the cut did not unlock sustained easing; guidance remained guarded for 2026. Fed cut and outlook
2. Meanwhile, structural worries helped keep Treasury yields elevated even as policy rates fell, a headwind for long?duration, liquidity?sensitive assets. Rising Treasury yields
3. The combination left crypto struggling to benefit from the policy shift, with sensitivity to the dollar and real yields intact. Market color

3. Tech Wobble and Event Calendar

A tech?led equity pullback and a packed macro calendar raised volatility and risk aversion.

1. Weakness in major tech shares weighed on broader risk sentiment and bled into digital assets. Tech sell?off linkage
2. The week was dense with macro catalysts, including CPI and PPI prints that can swing the path of rate expectations. CPI and PPI timing
3. Into events, leverage and thin liquidity create outsized moves when headlines surprise, magnifying otherwise modest shifts. Event?driven caution

Conclusion

The drawdown aligned with global liquidity fears (BOJ), a cautious Fed path that kept yields firm, and a tech risk wobble into a heavy data calendar. If BOJ tightens or yields stay elevated, risk?off impulses can persist; softer inflation or clearer easing could stabilize flows and reduce downside pressure.