The start of December has brought a harsh reality check for cryptocurrency investors, reminding the market just how quickly sentiment can shift. After what appeared to be a brief period of stabilization following weeks of turbulence, Bitcoin and its major peers were hit with a wave of fresh selling pressure. With concerns swirling around macro uncertainty, weakening ETF inflows, and renewed regulatory warnings, digital assets are now facing another critical test — one that could determine whether early-2026 begins with recovery or continues the downward spiral.
Below is a deeper look at what’s driving Bitcoin’s latest plunge, why confidence remains fragile, and what traders are watching as the market enters a pivotal month.
Crypto Suffers Steep Declines as Risk Aversion Returns
Bitcoin, the world’s largest cryptocurrency, fell as much as 6%, sliding below $86,000 during early Asia trading on Monday. Ether, the second-largest token, dropped more than 7%, hovering near $2,800. The broader market followed the same pattern:
- Solana (SOL) fell 7.8%
- Major altcoins posted single-digit to double-digit losses
- Total crypto market capitalization slid further from October highs
This sharp downturn comes after a weeks-long selloff that began when roughly $19 billion in leveraged crypto positions were liquidated in early October. That wipeout occurred just days after Bitcoin hit its all-time high of $126,251, creating a painful turnaround for traders who had bet on continued upside.
While Bitcoin managed to regain some ground last week — briefly reclaiming the $90,000 level — Monday’s decline suggests bearish sentiment still has a firm grip on the market.
Analysts Warn of More Downside: “$80,000 Is the Key Level Now”
According to Sean McNulty, APAC derivatives trading lead at FalconX, the crypto market is starting December in classic risk-off mode, with buyers hesitant and institutional inflows weakening.
“The biggest concern is the meagre inflows into Bitcoin ETFs and absence of dip buyers,” McNulty said. “We expect structural headwinds to continue. We are watching $80,000 as the next key support level.”
This matters because ETF inflows have become one of the key pillars supporting Bitcoin demand, especially after the explosive rally earlier in 2025. Thin inflows can quickly destabilize market structure, reducing liquidity and magnifying volatility.
Meanwhile, technical analysts warn that if Bitcoin loses $80,000, the next significant support area sits near $72,000–$74,000, where prior consolidation took place.
Strategy Inc. Sparks Fresh Fears With Comments About Potential Bitcoin Sales
Another contributing factor to Monday’s downturn came from Strategy Inc. CEO Phong Le, who suggested that the firm — a major Bitcoin holder with a $56 billion BTC stockpile — could theoretically sell some holdings if its internal valuation metric turned negative.
Strategy evaluates its balance sheet using a ratio called mNAV (market-adjusted net asset value) — essentially enterprise value divided by Bitcoin holdings. Le noted that if mNAV fell below 1.0, the company could “sell Bitcoin to fund dividend payments,” though he emphasized it would be a last-resort strategy.
With Strategy’s mNAV already sliding to 1.19, the comments rattled investors. Fears of large institutional selling can quickly spark panic, particularly during fragile market conditions.
More Trouble: USDT Downgrade + China Issues New Crypto Warning
Cryptocurrency markets were also shaken by two major regulatory developments over the weekend:
1. S&P Global downgrades stability assessment of USDT
USDT — the largest stablecoin in the world — was lowered to its lowest stability rating, with S&P warning that a sharp decline in Bitcoin could leave the token undercollateralized.
Given USDT’s central role in global crypto liquidity, any stress or credibility concerns can ripple across the entire ecosystem.
2. China’s central bank warns of virtual currency risks
The People’s Bank of China issued a fresh warning highlighting the dangers of virtual currencies and stablecoins, urging agencies to intensify crackdowns on illegal crypto activity.
Jeff Ko, chief analyst at CoinEx, summarized the atmosphere bluntly:
“A series of bearish developments — from the USDT downgrade to the PBOC warning — has renewed pressure on cryptocurrencies.”
These combined threats amplify market uncertainty just as traders were hoping for stability.
Macro Risk Returns: Investors Brace for Critical U.S. Economic Data
This week also marks an important moment for macroeconomic sentiment. As policymakers evaluate the path of interest rates heading into 2026, traders are highly sensitive to incoming data on inflation, employment, and economic growth.
Key points investors are watching:
- Whether the Federal Reserve will continue cutting rates
- How slowing inflation impacts risk appetite
- The potential nomination of a new Fed Chair by President Donald Trump
- Whether tightening global monetary conditions could curb liquidity
As risk-sensitive assets, cryptocurrencies are especially vulnerable when macro conditions deteriorate or uncertainty rises.
Global Markets Signal Caution as Asia Stocks Waver
Asian equities fluctuated Monday after posting their strongest weekly rally in nearly two months. Notable moves included:
- S&P 500 futures slipping lower
- Japanese stocks falling after the Bank of Japan hinted at a potential rate hike
- The Japanese yen strengthening, adding pressure to exporters
These cross-market moves reinforce the risk-off sentiment that has spilled into crypto trading.
Why December Could Be a Make-or-Break Month for Bitcoin
December is historically one of Bitcoin’s most volatile months, often setting the tone for the following year. With multiple headwinds already in play — regulatory warnings, ETF softness, macro uncertainty, and technical weakness — the market is teetering near critical levels.
Key catalysts that could determine Bitcoin’s direction:
- Strength of ETF inflows
- Resolution of USDT stability concerns
- U.S. economic data and Fed policy expectations
- Institutional appetite for risk heading into 2026
- Whether Strategy Inc. clarifies its selling stance
A sustained drop below $80,000 could trigger one of the deeper corrections seen since the October liquidation wave.
Crypto Enters December With Nerves High and Buyers Hesitating
Bitcoin’s drop below $86,000 highlights a broader truth about cryptocurrency markets: momentum can flip in an instant, especially when investor confidence is already delicate. With ETF flows slowing, regulatory pressure rising, and key economic decisions on the horizon, the market is holding its breath as December begins.
Still, this environment doesn’t eliminate the long-term case for Bitcoin — it simply underscores how volatile digital assets remain when liquidity tightens and fear rises. For traders, risk management will be essential; for long-term believers, corrections like these have historically offered opportunity.
Whether Bitcoin stabilizes above $80,000 or breaks lower will likely define sentiment heading into 2026.