Bitcoin fell in tandem with a weakening yen during a session marked by sharp institutional outflows and a Fear & Greed Index reading of just 10, a level that reflects widespread market anxiety. The move came as Canada approved a new federal framework for stablecoins in its 2025 budget, requiring one-to-one reserves and placing the Bank of Canada in a supervisory role — a development now shaping expectations for liquidity, compliance, and market structure.

Bitcoin Slides as Macro Stress Collides With New Canadian Stablecoin Rules

Bitcoin’s drop toward the $85,000 zone unfolded as investors reacted to a mix of macroeconomic pressure and broad risk-off flows. The combination of currency volatility and policy tightening amplified implied volatility across crypto markets, setting the tone for a defensive trading environment.

The yen’s retreat rippled through global assets and added pressure to Bitcoin, reinforcing its increasingly familiar negative correlation with safe-haven instruments. The reported –0.53 correlation with gold illustrates how strongly defensive positioning influenced the move.

ETF outflows added another layer to the decline, reflecting institutional pullback at a moment when sentiment was already fragile. With the Fear & Greed Index sitting at 10, market participants were clearly operating from a place of caution, if not outright fear.

When a major currency weakens, investors tend to rebalance toward safety — reducing exposure to risk-on assets and tightening liquidity conditions. In crypto, this dynamic typically magnifies volatility, and the recent move in Bitcoin was no exception.

Canada’s newly approved stablecoin framework introduces firm operational and security requirements. Issuers must maintain 1:1 reserves, support immediate redemption, and comply with stricter standards for cybersecurity and risk management. Non-bank issuers will also be barred from offering yield on stablecoins, while a public registry of approved issuers aims to increase transparency and curb fraud.

The Bank of Canada will now oversee the sector, and additional national-security safeguards may be codified through the upcoming “Stablecoin Act.” Coinbase Canada CEO Lucas Matheson welcomed the clarity and called for transitional measures to accelerate the arrival of Canadian-dollar stablecoins.

Stablecoins are designed to maintain a stable value by backing their supply with fiat assets or liquid instruments, minimizing volatility relative to traditional currencies. Under the new rules, issuers and custodians face higher operating costs — but the standards also raise the barrier to entry, potentially improving market safety.

Taken together, the sharp correction in Bitcoin and Canada’s push toward structured stablecoin oversight highlight a dual reality: the crypto ecosystem remains highly sensitive to macro shocks, yet continues to move toward deeper institutionalization. In the coming weeks, market direction will hinge on the progress of the Stablecoin Act in Ottawa and on the behavior of crypto ETF flows, both of which will play a central role in shaping liquidity and sentiment.