The cryptocurrency market faced a brutal start to December, with Bitcoin leading a sharp sell-off that wiped out billions in value during early Asian trading on Monday. The world's most prominent digital currency tumbled below the critical $86,000 mark, signalling a renewed wave of fear among investors.
Major Tokens Register Steep Declines
Bitcoin plummeted by approximately 6%, breaching the $86,000 support level that traders were closely monitoring. The decline was not isolated to Bitcoin. Its closest rival, Ether, suffered an even steeper fall, declining more than 7% to hover around the $2,800 price point. Other major altcoins, including Solana, also registered significant losses, painting a bleak picture for the broader digital asset sector.
Traders attributed this widespread slump to a fresh 'risk-off' sentiment taking hold in the market. According to a Bloomberg report, this cautious mood stems from ongoing struggles since a wave of leveraged positions was liquidated in early October. That event alone erased nearly $19 billion from the market, occurring shortly after Bitcoin had touched its all-time high of $126,251. Despite a brief recovery last week that pushed prices above $90,000, Bitcoin still ended November with a loss of nearly 17%.
Analysts Point to Structural Headwinds and Key Support
Market experts are sounding the alarm for a challenging month ahead. Sean McNulty, APAC derivatives trading lead at FalconX, described it as a "risk-off start to December." He highlighted the lack of substantial inflows into Bitcoin exchange-traded funds (ETFs) and the noticeable absence of buyers during price dips as the biggest concerns. "We expect the structural headwinds to continue this month. We are watching $80,000 on Bitcoin as the next key support level," McNulty added, setting a crucial benchmark for the token's near-term trajectory.
Market sentiment took an additional hit following comments from Phong Le, CEO of Strategy Inc. Le indicated that the company, which holds a massive Bitcoin treasury worth approximately $56 billion, might sell some of its holdings if necessary to support dividend payments. This potential selling pressure from a major holder added to investor anxiety.
Regulatory Warnings and Economic Data in Focus
Further compounding the market's jitters was a recent action by S&P Global Ratings. The agency downgraded its stability assessment for USDT, the world's largest stablecoin, citing risks of under-collateralization if Bitcoin prices continue their downward spiral.
On the regulatory front, the People's Bank of China reiterated its warnings about the risks associated with virtual currencies. The central bank called for stricter action against illegal cryptocurrency activities, reminding the market of the persistent regulatory challenges facing the sector.
All eyes are now turning to key US economic data scheduled for release this week. This data is crucial as it will shape expectations regarding future interest-rate cuts by the Federal Reserve. Adding to the policy speculation, US President Donald Trump announced on Sunday that he had finalized his choice for the next Fed chair, fueling debates about the central bank's direction in 2026.
Crypto traders are cautioning that volatility is likely to remain elevated in the near term. Global financial markets are delicately balancing shifting expectations on interest rates and interpreting new regulatory signals, creating an uncertain environment for risk assets like cryptocurrencies.
