Risk assets are wobbling as Japan’s yield curve bear-steepens and the Yen keeps sliding, signaling early stress in the global debt supercycle. With Japan, the world’s largest creditor, facing constraints on short-term rates, the threat of reduced global credit supply is growing just as U.S. tech and crypto depend heavily on it. This tightening backdrop is dragging BTC and ETH lower, with U.S. trading hours driving the bulk of the selloff.
Tuesday 8:30am - PPI
Tuesday 9:00am - S&P Case Shiller index
Thursday - US Holiday
There have been whispers around what’s happening for risk assets recently.
In short, I can’t help but believe the "global debt supercycle” theme is starting to rear its ugly head.
We talked about the first domino in the western world, “debt supercycle” 2 years ago, in the video below.
Chart: JPY10 TradingView.com
Chart: JPY30 TradingView.com
We’re seeing a bear steepening affect in the Japanese yield curve.
Meaning investors are bearish bonds (bear) and the long-end (30y) yields are being sold the hardest.
Meanwhile, as rates rise, the Yen continues to decline in value, despite the shrinking yield differential… why?
Because the yield differential 10-years out doesn’t matter for Spot USD/JPY. Short-term rates matter most for “carry” traders and the JPY overnight rate is PINNED down while the USD Fed Funds December 10th FOMC rate cut, is merely a coin-flip probability of happening.
Debt load is so high in Japan that they’re not likely to raise the short-term rates.
So why doesn’t this matter?
Well, Japan is one of the world's biggest creditors (especially for US fiscal budgets, via treasury holdings) and the most indebted Western country in the world (by debt/GDP measurement).
Will they be the first to hyperinflate? Will they pull back on being a creditor? The first leg of the global debt supercycle to wobble?
Removing the world's biggest supply of credit while US tech stocks are pricing in CapEx growth that heavily depends on the supply of credit… seems to be a mismatch.
BTC: $87,327 (-7.6% / 7-day)
ETH: $2,865 (-8.7% / 7-day)
SOL: $132.89 (-2.3% / 7-day)
BTC has been riding lower, alongside tech stocks and equity indices.
Chart: BTC Spot (weekly chart) TradingView.com
As we noted last week, the NVDA earnings trade could be (and was) a good catalysts for the indices to rally higher.
BTC also rallied with NVDA after-hours on the earnings announcement.
However, market participants used the NVDA “gap-up” open as opportunity to sell longs. This was the “OUT” for trapped longs.
BTC led this move lower!
Chart: NVDA hourly chart (TradingView.com)
If we break apart the BTC performance by geographic trading session (EU, APAC, US) we can see that the US trading session is responsible for all the BTC negative PnL.
To me, this proves that US Tech weakness is the source of the crypto drag.
Note, the US tech weakness, however, can be a result of a global credit crunch. Therefore: Credit → US Tech AI → Crypto
In volatility terms, we’re well set up for a “short-the-downside-vol” this week.
Holiday weeks (like Thanksgiving) usually are much more quiet than regular trading weeks, especially given a closed equity market Thursday and a half-day Friday.
Seasonally speaking, December has been quieter than November by about 6% RV over the past 3-years.
Chart: BTC ATM Variance Risk Premium (VRP)
Chart: BTC ATM Term Structure (Week-over-week)
We also see that IV jumped a good amount last week, (justified by VRP) but the term structure is in Backwardation now and could naturally return to Contango as markets recover into December.
ETH is absolutely uninteresting to me here.
If anything, I like getting long BTC + SOL, financed by short ETH.
I think there’s a lot of ETH DATs that are underwater and will become a source of ETH overhead supply for the time being.
Chart: ETH/BTC finviz.com
Given the Deribit ETH gamma expsoure charts, we can see that ETH is in a long gamma zone between $2.5k and $3k.
I would be looking to sell some upside paper, as ETH tests $3k again.
Using the proceeds to potentially finance some BTC / SOL longs… In some type of spread trade.
Chart: ATM Volatility 12/26 expiration (ETH vs BTC)
Above we can see the spread between BTC and ETH ATM volatility YTD for the Dec 26th, 2025 EOY expiration.
Solana options seem to be peppered with hedging flows by the “street”. Dealers are long OTM upside gamma and short OTM downside gamma.
Dealer gamma rebalancing would counteract any spot price rally (bearish the rally). However, the Solana options market is too small to be affecting spot markets imo.
Therefore the SOL GEX is merely a good sentiment indicator.
I think dealers being Short-puts and Long-calls into Thanksgiving week is the PERFECT trade. I’d want the same position (fading the hedging activity organic Solana longs).
BTC
ETH
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AMBERDATA DISCLAIMER: The information provided in this research is for educational purposes only and is not investment or financial advice. Please do your own research before making any investment decisions. None of the information in this report constitutes, or should be relied on as a suggestion, offer, or other solicitation to engage in, or refrain from engaging, in any purchase, sale, or any other investment-related activity. Cryptocurrency investments are volatile and high risk in nature. Don’t invest more than what you can afford to lose.