Bitcoin Takes a Steep Drop as Weak Sentiment Drags Crypto Sector Lower
Bitcoin (BTC) has started December in a slump, extending a multi-week downturn that has lowered confidence across digital asset markets. The cryptocurrency fell from the low $90,000s late last week to about $84,000 on Monday, one of its largest single-day drops since early autumn. Analysts across major financial outlets said the move reflects a fragile investor mood at the tail end of a volatile year.
Equity markets opened lower as well, amplifying the risk-off tone, but the losses in crypto were far sharper. A combination of macro pressures, leveraged unwinds, and fading retail enthusiasm has pushed the world’s largest token more than 30% below its October peak.
Japan Fears Trigger a Liquidity Squeeze
The immediate catalyst came from renewed expectations that Japan may begin raising interest rates. That shift matters because of the widespread use of the yen as a source of cheap funding for global risk trades — including Bitcoin. A similar episode in August 2024 caused an abrupt unwind that cut Bitcoin nearly 20% in days, a parallel now driving traders’ caution.
Market strategists told several news outlets that the pattern seems to be repeating: as yen carry trades unwind, leveraged crypto positions are the first to be hit, exacerbating price swings. Analysts note that while the macro backdrop in the US — especially the probability of a Federal Reserve rate cut — is still broadly supportive, cross-currents from overseas can override local optimism in the short term.
Sentiment Turns as ETFs See Heavy Outflows
The deeper issue is continued weakness in market sentiment, highlighted by large outflows from Bitcoin exchange-traded funds. November marked one of the worst months for ETF withdrawals this year, with more than three billion dollars exiting the category. Bloomberg analysts said the flows reflect institutional caution driven by tightening global financial conditions and worries about overextended crypto valuations.
Bitcoin has now given up nearly a third of its value from its record above $126,000 in October. Research desks at Bernstein and digital asset analytics firms noted that they see “no definitive signs of a bottom,” citing low conviction buying, reduced liquidity, and a decline in market depth.
Crypto Stocks Feel the Shockwave
Publicly traded crypto companies sank alongside the token. Shares of Coinbase, Robinhood, and multiple miners fell sharply on Monday, extending month-long declines. Strategy — the largest public corporate holder of Bitcoin — dropped to a new yearly low after the company disclosed a wide range of possible annual income outcomes and acknowledged investor concerns regarding its debt-service capacity if prices were to continue falling.
While Strategy added more Bitcoin last week, taking its holdings to roughly 650,000 tokens, worries lingered that sustained declines could force the company to draw on reserves to cover dividends and interest. Several equity-market strategists, however, argued the more extreme scenarios being circulated online are unrealistic without a historic, multidimensional shock to the global economy.
A Market Searching for Direction
Crypto trading has thinned out across major exchanges, leaving prices unusually sensitive to macro headlines rather than crypto-specific catalysts. Analysts note that liquidity in both Bitcoin and large altcoins has pulled back, with buyers unwilling to step in until Bitcoin can either reclaim the $90,000s or establish firmer support. Until that happens, the broader market is stuck in a holding pattern, marked by fast swings, low conviction, and traders avoiding new risk.
Looking Ahead
The next several days will be key for crypto markets. Traders are watching whether Bitcoin can hold above the low-$80,000 range — a zone viewed as psychologically important after repeated failures to reclaim $92,000. Macro developments, especially the delayed release of key US inflation data and central-bank commentary from major economies, could shape near-term direction.
While the probability of a US rate cut still supports longer-term bullish arguments, sentiment remains fragile. Unless inflows return and volatility eases, analysts warn that the typical year-end recovery may be muted — leaving markets to wait until early 2026 for a clearer signal that confidence is rebuilding.
