01.12.25 - Forced selling stops Santa rally

Forced selling sends new shockwaves through global markets
A new wave of selling pressure hit global markets overnight, triggered by forced deleveraging in the crypto space. The move began during the Asian trading session, where fears of a potential rate hike by the Bank of Japan (BoJ) intensified with yen continuing to weaken. Investors were pushed to reduce leveraged positions once again, a dynamic reminiscent of earlier stress episodes this year in April.

Adding to the pressure, early macro indicators out of Japan and China released in morning and later in the US showed renewed softness, reinforcing concerns that economy remains fragile. The combination of forced selling, macro uncertainty and shifting rate expectations set the tone for a risk-off day globally.

Markets: red across the board

• Equities fall globally

• Bonds: losing ground globally — 10-year yield climbs to 4.09%

• Gold: climbing and approaches latest record highs, now at USD 4’250/oz while silver price reaches record highs with USD 58

• USD: sees continued pressure

• Cryptos: brand sell-off, Bitcoin falling below USD 84k

• Volatility: VIX higher with renewed uncertainties

My View: the latest market move is less about fundamentals today and more about forced mechanics. With yen dropping to record lows, rate-hike fears emerge in Japan, pushing leveraged investors — especially those using JPY as a funding currency — to unwind positions quickly. Crypto is often the first area where liquidations accelerate, but the spillover into equities and commodities is becoming increasingly visible.

This environment is defined by fragile liquidity, elevated leverage, and the field where speculators conviction fading quickly. A single spark can trigger broad selling. Today’s trigger was in Asia, but the underlying vulnerability is global.

The last days demonstrate how sensitive investors are to any shift in rate expectations, whether from the Fed or, increasingly, the BOJ. With inflation concerns resurfacing and macro indicators from Asia disappointing, volatility is likely to stay elevated.

For now, staying disciplined remains key. Forced selling episodes often create noise, but they also reveal where the real cracks in positioning lie. More waves could follow.

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