Bitcoin off to a “violent” December

Bitcoin dropped below $85,000 on the first morning of December, plummeting nearly 6% in the past 24 hours. The asset is down over 31% from its October 6 all-time high, and the tumble comes on the heels of two previous difficult months for the asset. This is also bitcoin’s second-worst fourth quarter, down 24.4%, according to CoinGlass.

Timothy Misir, head of research at Blockhead Research Network, called bitcoin’s drop “violent” and the washout a “classic liquidity and positioning event, painful, fast, and crowd-creating.”

Meanwhile, while bitcoin ETFs didn’t suffer outflows last week, they closed “Painvember” with the lowest weekly inflows ($70 million) since September, SoSoValue data shows.   

About $200 billion was wiped out from the crypto market cap, which now stands at under $3 trillion, as the risk-off sentiment is setting the tone on the first day of the month. Total crypto liquidations hit $791 billion in the past 24 hours, with $300 million in bitcoin longs.

Experts say bitcoin is still facing several macro headwinds that could put further pressure on the asset. 

Nic Puckrin, cofounder of Coin Bureau, said traders are waking up to an overwhelming sense of déjà vu as a surge in the Japanese yen is once again playing havoc with markets. 

“With the two-year Japanese yields also spiking to the highest level since 2008 and the likelihood of a rate hike by the Bank of Japan now at 76%, the Japanese yen carry trade is once again beginning to unwind,” he said.

The last time this occurred, in August 2024, bitcoin also plunged from over $66,000 to around $54,000 in just a few days, an 18% drop, he said, adding that as history is repeating itself, “it’s wise to prepare for more volatility.”

Misir said that bitcoin is now testing structural support in the mid-$80,000 range.

“Reclaiming the low-$90Ks would signal stabilization; failing that, the path toward the low-$80Ks becomes probable,” he said.

“The market has not yet signaled a durable regime shift; it has signaled stress,” he continued. “With macro prints and Fed-related headlines stacked this week, expect violent two-way trading.”

Farzam Ehsani, CEO of cryptocurrency exchange VALR, said that adding to these challenges, the correlation with previous bear markets is continuing to grow.

“This uncertainty makes it difficult to establish a clear shift in direction, as the market continues to oscillate between forced de-leveraging and muted dip-buying, with neither side able to maintain momentum,” he said.

If the market continues to decline, bitcoin could test the $60,000 to $65,000 range. “The main questions at the moment are how the market will close out this year and whether bitcoin will recover above $100,000 in December,” Ehsani said.