Bitcoin fell below $87,000 on Monday, its biggest drop in recent weeks, signaling a new wave of volatility as the December selloff reverberates across the crypto market. The decline erased last week’s gains and was part of a broader decline in other major digital assets.
The decline occurred in early trading in Asia, with Bitcoin briefly falling to an intraday low near $86,125. The early trading decline in Asia led to more than $400 million in liquidations in leveraged crypto futures trades, and the global digital asset market value fell by about 4% to about $3 trillion. This suggests that many traders had been betting on a recovery in prices, but were caught off guard by the sudden drop.
Significant losses in November deepen market vulnerabilities, leading to major token declines
Ether fell more than 6% to below $2,900, according to CoinMarketCap. It is worth noting that most tokens are following a similar pattern, with Solana experiencing a decline of almost 7%.
The decline follows a tough November, when Bitcoin fell 18%, ending the month with its worst performance since March. This is despite the major cryptocurrency recovering from almost $80,000 to over $90,000. Ether suffered further, falling 22%, posting its biggest monthly loss since February.
The market remains fragile since around $19 billion in leveraged positions were wiped out in early October, just days after Bitcoin hit an all-time high of $126,251. Bitcoin fell in November, but briefly stabilized last week, returning to above $90,000. A final wave of sellers has traders bracing for further declines.
“Starting in December is a risk,” said Sean McNulty, head of Asia-Pacific derivatives trading at FalconX. “Our biggest concern is the lack of inflows into Bitcoin exchange-traded funds and the lack of buyers on the bullshit. We expect the structural headwinds to continue this month. We are eyeing Bitcoin’s $80,000 as the next key support level.”
Investor sentiment was further tested by Friday’s comments from Strategy CEO Von Leh, who said the company could sell Bitcoin if its mNAV (enterprise value relative to Bitcoin holdings) falls below 1. “We can sell Bitcoin and will sell Bitcoin if the funds for dividend payments are less than 1x mNAV,” he said, emphasizing that this is a last resort. The mNAV of Strategy, which holds $56 billion in Bitcoin inventory, fell to 1.19, according to the company’s website.
Weakness in ETF inflows and renewed concerns about stability increase volatility in December
Adding to the pressure, S&P Global Ratings last week downgraded the stability rating of USDT, the world’s largest stablecoin, to its lowest level, warning that further declines in Bitcoin could lead to a shortage of collateral for the token.
Still, Tether CEO Paolo Ardoino fired back shortly after S&P’s move, saying the company was proud of its critics’ antics. He pointed to repeated failures of ratings agency models and said traditional financial propaganda agencies are becoming increasingly concerned about companies trying to resist the gravity of a failed financial system. He added that Tether has instead created the financial industry’s first overcapitalized company with no toxic reserves.
This week will provide important reading on the momentum of the U.S. economy as policymakers assess the path for interest rates through 2026. The data could influence expectations for further rate cuts from the Federal Reserve. President Donald Trump said Sunday that he has chosen the next Federal Reserve chairman and expressed hope that the candidate will support low interest rates.
Asian stock markets were mixed on Monday after posting their best weekly performance in two months. Japanese stocks fell and the yen strengthened after Bank of Japan Governor Kazuo Ueda gave his clearest hint yet about a possible interest rate hike this month.
