The cryptocurrency market is navigating a severe downturn, with Bitcoin, the world's leading digital asset, witnessing a dramatic fall from its recent all-time highs. After scaling a record peak above ₹126,000 in October, Bitcoin has entered a nearly two-month bear run, shedding a significant 33% of its value. The broader digital asset ecosystem has mirrored this decline, with the total market capitalisation dipping below the $3 trillion mark.
A Perfect Storm of Macroeconomic Pressures
The sharp correction gained momentum following a highly volatile weekend that triggered massive liquidations. Riya Sehgal, Research Analyst at Delta Exchange, highlighted that over $500 million in leveraged positions were wiped out, severely damaging market sentiment and suppressing risk appetite. This sell-off is not occurring in isolation. Analysts point to a confluence of external factors shaking investor confidence.
According to an Associated Press report, the retreat from cryptocurrencies parallels growing anxiety over a potential bubble in artificial intelligence (AI) and technology stocks, prompting a broader flight from risky assets. Nischal Shetty, Founder of WazirX, identified a crucial trigger: hints from the Bank of Japan (BoJ) about a potential interest rate hike. This shift in global monetary policy is "pulling liquidity out of global markets, tightening financial conditions at a moment when risk assets were already unpopular," experts noted.
The pressure was starkly visible during US trading hours, where a wide-ranging sell-off led to the liquidation of approximately $1 billion in leveraged crypto bets. As per a Bloomberg report, Bitcoin briefly tumbled 8% to $83,824 in New York before recovering some ground. Data from CoinMarketCap showed Bitcoin trading at $86,502.95 by the afternoon of December 2, reflecting a 0.35% slide for the day.
Bitcoin and Ethereum: Assessing the Damage and Support Levels
The bearish momentum has engulfed major tokens. Ethereum, the second-largest cryptocurrency, has not been spared. It dropped 10% to $2,719 in overnight US trade and was down 36% since October, settling at $2,797.84 by December 2 afternoon. Riya Sehgal observed that Ethereum is now stabilising near the $2,800 level after testing $2,700. She added that for Bitcoin, which is struggling below the $89,000 mark, buyers are actively defending a crucial short-term support zone between $84,000 and $83,500.
The outflow from crypto products is significant. An AP report added that investors withdrew roughly $3.6 billion from Bitcoin exchange-traded funds (ETFs) in November alone—the largest monthly pullout since these funds began trading in January 2024. This contrasts sharply with traditional safe havens; Bitcoin futures have fallen nearly 24% over the past month, while gold futures have jumped close to 7%.
Shetty noted that the prevailing market caution could tilt the sentiment scale further towards 'Fear,' as experts project capital moving towards safer, income-generating positions. The pain extends to smaller altcoins as well. The CoinDCX research team noted minimal recovery for tokens like XRP, while Solana, DOGE, LTC, and ADA remained weak. Alarmingly, an index tracker found the bottom half of the top 100 digital assets is down almost 70% in 2025.
Expert Outlook: Navigating Volatility with a Long-Term View
Despite the gloom, industry leaders advocate for perspective and highlight underlying strengths. Raj Karkara, COO of ZebPay, believes the current trends reflect temporary caution rather than a fundamental shift in Bitcoin's long-term trajectory. "Several on-chain metrics, including long-term holding behaviour, supply illiquidity, and sustained institutional participation, indicate that underlying conviction remains strong," he stated.
On Ethereum's prospects, Nischal Shetty remains optimistic, pointing to upcoming network upgrades like the Fusaka upgrade, which aims to improve transaction output on its layer 2 chains. He also cited Grayscale's move to convert its Chainlink Trust to an ETF as a boost for long-term, regulated access. Avinash Shekhar, Co-founder and CEO of Pi42, concurred, noting that pockets of conviction exist, evidenced by a surge in Ethereum's futures volume and resilience in select altcoins.
For Bitcoin's immediate technical path, the CoinSwitch Markets Desk indicated that if the price holds above $85,500, momentum could build towards the $87,500-$88,000 resistance zone. A break above this level may open a path to $89,000-$90,000. Shekhar added that Bitcoin is moving through a "heavy liquidity pocket" driven by macro signals, and the market will remain sensitive to policy cues until global risk stabilises.
Karkara's advice to investors is clear: "Periods like this reinforce the importance of discipline, diversification, and a long-term outlook. Investors should avoid reacting to short-term fluctuations and instead align allocations with their risk tolerance and broader financial goals."
Key Takeaways:
- Macro-economic factors, including central bank policies and AI stock fears, are the primary drivers of the current crypto downturn.
- On-chain data and sustained institutional interest suggest strong long-term conviction despite short-term bearish sentiment.
- Investors are advised to focus on long-term strategies, maintain discipline, and avoid panic selling during volatile phases.
