On Tuesday (December 2), as the Asian market opened, the cryptocurrency market remained shrouded in pessimism, with Bitcoin hovering around $87,000. It briefly fell below the $84,000 mark yesterday, and the latest round of selling seems primarily driven by signals of interest rate hikes from the Bank of Japan suppressing risk assets. Additionally, weak ETF inflows and limited buying on dips indicate that structural demand remains sluggish.
As of the time of writing, according to CoinDesk data, Bitcoin is trading at approximately $87,000, down about 30% from its historical high of over $126,000 set on October 8.
<img src="https://imageproxy.pbkrs.com/https://static.fx168api.com/img/user/738c728bd13ac655b891101d5dc94a9c/outside1764652103637?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://static.fx168api.com/img/user/738c728bd13ac655b891101d5dc94a9c/outside1764652103637"/>
(Source: coindesk)
Ethereum is hovering around $2,794, continuing to face pressure. ETH-related tokens linked to government bonds fell over 10% during Monday's sell-off in crypto stocks. Ethereum depreciated about 22% in November, marking its worst month since a 32% drop in February.
The latest round of Bitcoin's decline is related to Japan
Emir Ibrahim, an analyst at Zerocap digital asset trading company, stated that Bitcoin has pulled back again after briefly stabilizing over the weekend, bringing back vulnerability and volatility. Upcoming U.S. data this week could change market expectations for interest rates, thereby affecting risk assets.
Analysts pointed out that weak ETF inflows and limited buying on dips indicate that structural demand remains sluggish.
Ibrahim noted that the latest round of cryptocurrency declines seems to coincide with rising Japanese government bond yields following comments from Bank of Japan Governor Kazuo Ueda on Monday, prompting the market to shift back to safe-haven positions.
Forced liquidations have intensified, with over $500 million in Bitcoin leveraged long positions being liquidated. It remains unclear whether this is related to concerns over the unwinding of &#34;yen carry trades&#34; (borrowing yen at low interest rates and converting it into higher-yielding assets like Bitcoin).
Total forced liquidations nearing $1 billion
Yesterday, Bitcoin experienced a significant drop, with the world's largest cryptocurrency falling about 6%, heading towards its largest single-day decline since early November, as risk-averse sentiment led investors to sell digital assets and other assets. According to CoinGlass data, the total amount of forced liquidations in the crypto market in both long and short positions approached $1 billion in the past 24 hours
According to Reuters data, this trend emerged after Bitcoin experienced its largest monthly decline since mid-2021. Bitcoin evaporated over $18,000 in November, with a significant amount of capital leaving the market, marking the largest single-month dollar decline since the crash of various cryptocurrencies in May 2021.
Adding to the pessimistic atmosphere on Monday, Strategy, the world's largest Bitcoin corporate holder, lowered its profit expectations for 2025, citing weak Bitcoin performance. Strategy's stock price fell by 3.3%.
Decline in Crypto Enthusiasm
Juan Perez, trading director at Monex USA (Washington), stated, &#34;Bitcoin seems to be affected by the waning enthusiasm in the crypto market and even the entire tech sector.&#34;
He said, &#34;The current negative sentiment is related to the rising market concentration and doubts about overall growth sustainability, including infrastructure issues and reduced global trade cooperation.&#34;
Recently, the stock market has also pulled back due to concerns over excessive optimism in AI trading and the overvaluation of tech stocks. On Monday, most global stock markets fell, with the MSCI Global Index down about 0.40% and the S&amp;P 500 Index down 0.5%.
Risk Indicators and Market Correlation
Since Bitcoin has not been around for long, its performance in December lacks a clear seasonal pattern. On average, Bitcoin typically rises about 9.7% in December, ranking third in performance. October is usually the strongest, with an average increase of 16.6%; September is the weakest, with an average decline of 3.5%.
Some strategists are closely monitoring the correlation between Bitcoin and the stock market, with some believing that Bitcoin may be a leading indicator for risk assets.
Joe Saluzzi, co-founder of Themis Trading in New Jersey, stated that crypto assets and stocks may be linked through ETFs, but they do not always move in sync. For example, on Monday, the stock market only saw a mild decline, while crypto assets were heavily sold off.
XTB research director Kathleen Brooks noted in a report, &#34;Bitcoin currently tends to be a leading indicator of overall risk sentiment. Its decline is not a good sign for the stock market's performance at the beginning of the month.&#34;
She added, &#34;There were no obvious direct drivers on Monday. However, last week's significant drop in volatility, with the VIX falling below the average level of the past 12 months, may have made some investors, who are still uneasy about the year-end outlook, even more nervous.&#34;
CME's Bitcoin futures also reflect the increasingly bearish sentiment in the market. The premium of Bitcoin futures expiring in three months has dropped to the lowest level in at least a year compared to contracts expiring this month, indicating a weakening expectation for continued price increases.
Cumulative Negative Factors
Jefferies strategist Mohit Kumar stated that multiple adverse factors for the crypto market intensified the pressure on Bitcoin on Monday.
S&amp;P Global downgraded the rating of Tether (USDT), the world's largest stablecoin, last week, citing an increase in the proportion of high-risk assets in its reserves and &#34;persistent disclosure gaps.&#34; Tether strongly disagreed with this assessment
Other cryptocurrency-related stocks also fell, with Coinbase down 4.8%.
According to CoinGecko data, since the cryptocurrency market cap reached a historical high of $4.3 trillion, over $1 trillion in market value has evaporated.
Marc Chandler, Chief Market Strategist at Bannockburn Capital Markets, stated that the key is &#34;what people are discussing&#34; regarding Bitcoin. &#34;I see many people trying to link the sell-off in the crypto market to declines in other asset markets. But we need to examine this narrative. It is currently unclear... but we must keep a close watch.&#34;
Preparing for a drop below $80,000
Bitcoin traders are increasingly adopting defensive positions in preparation for a potential drop below $80,000 in the new year.
Nick Forster, co-founder of Derive, stated in a market commentary: &#34;The significant decline in volatility skew indicates that traders are heavily buying put options, particularly concentrated on contracts expiring on December 26, with open interest mainly focused on the strike prices of $84,000 and $80,000.&#34;
He added: &#34;This positioning suggests that the probability of Bitcoin falling below $80,000 in early 2026 is not low.&#34;
Forster indicated that the downward trend may not yet be over, and market participants are pricing in a volatile December. &#34;I don't believe Bitcoin has bottomed out. Short-term volatility is higher than long-term volatility, indicating that the market expects greater fluctuations as the new year approaches.&#34;

03066

GBTC

03135

FBTC

The price of Bitcoin has fallen sharply, once dropping below $84,000, mainly due to signals from the Bank of Japan regarding interest rate hikes suppressing risk assets. ETF inflows are weak, with limited buying on dips and sluggish structural demand. Bitcoin has declined by about 30% since its peak in October. Ethereum's price is also under pressure, depreciating by about 22% in November. Analysts point out that market risk aversion has intensified, with total forced liquidations approaching $1 billion

mitrade

FA CSOP BTC

Grayscale Bitcoin Trust BTC - ETF

FA SAMSUNG BTC

Fidelity Wise Origin Bitcoin Fund - ETF

Multiple bearish factors trigger a sell-off! Bitcoin once collapsed below 84,000, preparing to drop below 80,000 for the New Year?