Bitcoin Starts December on the Back Foot, Pulls Back Under $86K

Bitcoin dipped below $86,000 on Monday in a poor start to December after crashing over 17% last month.

Global stocks started the final month of 2025 on a steadier note, bolstered by growing optimism surrounding an imminent US interest rate cut despite data fog.

Bitcoin, which was hovering around $91,000 at the end of November, has been gradually falling, more out of exhaustion than surrender, since then.

Everything changed when a surge of sellers broke through multiple intraday support levels and pushed prices closer to the $86,900 region, wiping out a week’s gains in one single candle and more than $144 billion from its market cap.

The sudden increase in sales volume suggested forced liquidations or huge stop orders being activated.

Those holding long positions faced significant losses, totaling over $535 million, whereas those with short positions experienced much smaller losses of around $73 million. Bitcoin and Ethereum spearheaded the shift, with approximately $185 million and $154 million liquidated.

For those engaged in significant leverage, the shift seemed less like a neat correction and more akin to a trapdoor that recalibrated positions as December approached.

The stock markets seemed to be steadier. There was little change in the broad index of Asia Pacific shares outside Japan, but it is on track for its strongest yearly gain since 2017 at 23.5% so far.

While US market futures were worse, the Hang Seng in Hong Kong rose more than 1% in early trading, offering some assistance to the Nikkei in Japan, which fell about 1.3%.

Although recent industrial data showed that activity continued to shrink in November, a jump in metal stockpiles at the beginning of the month gave a favorable boost for Chinese shares. After hearing rumors that property developer China Vanke couldn't get a short-term bank loan, investors were understandably wary about the country's real estate market.

Focus is also directed towards the Fed. Market participants are eagerly anticipating insights from Chair Powell later on Monday, as they seek guidance on the upcoming policy meeting scheduled for mid-December.

Recent dovish statements from officials have reinforced the expectation that another rate cut is on the horizon.

Current pricing in futures markets suggests there is an 87% likelihood of a movement occurring this month. The forthcoming figures may play a crucial role in deciding if rate reductions will persist into 2026.

This week's releases will come in the context of a rather unique environment.

A notable 43-day government shutdown earlier this year postponed essential reports, resulting in policymakers relying on data that, in certain instances, is already obsolete.

That has prompted markets to depend increasingly on addresses from regional Fed presidents and governors for direction.

Recent remarks from San Francisco Fed President Mary Daly and Governor Christopher Waller have strengthened the outlook for ongoing easing, while New York Fed President John Williams has indicated that he perceives potential for another reduction soon as labor conditions begin to soften.

The upcoming data will play a crucial role in influencing discussions regarding the potential extension of the rate reduction phase into 2026, particularly as inflation eases and consumer demand steadily diminishes.

For those involved in cryptocurrency trading, the same information will determine if Monday’s Bitcoin decline is merely a temporary adjustment or the beginning of a more significant correction following an impressive surge to a record high of above $126,000, which was called a wild bet not too long ago.

Bitcoin's Slide & What Next?

On Sunday night, Bitcoin fell below $86,500, influenced by macroeconomic pressures and the hacking incident involving Yearn Finance, prompting investors to adopt a more cautious stance.

Within three hours on Sunday night, Bitcoin's value plummeted from about $91,300 to about $87,000, as a result of a major sell-off.

The new change has wiped out Bitcoin's five-day recovery above $90,000, bringing its price back down to levels similar to the mid-to-late-November slump.

The overall value of all cryptocurrency markets has dropped by 4.5 percent, or more than $144 billion.

Bets of a 25 basis point reduction by the Fed in December played a role in Bitcoin's temporary increase in December. Despite the optimism surrounding potential rate cuts, experts believe it won't suffice to reignite the market's upward trajectory.

Tug of War Between Gains & Losses

However, similar to previous cuts, a rate decrease by the Fed might cause Bitcoin to surge 10% to 15% the following week, reaching $95,000 to $100,000. Its price might skyrocket to $110,000 to $120,000 if Powell makes another dovish statement for 2026.

Crypto venture capital firms believe that gaining a clear understanding of macroeconomic factors will be the key driver in the coming months.

Although the market has factored in the possibility of an interest rate cut, it may be undervaluing the extent to which policy could shift towards a more accommodating stance if a new Fed chair favors maintaining liquidity levels.

On Sunday, President Donald Trump revealed that he has made his selection for the next leader of the Federal Reserve, though he did not share the name.n Bloomberg has indicated that Kevin Hassett, the current director of the National Economic Council at the White House, is the top candidate for the position.

Surge in Liquidations

Over the weekend, Bitcoin struggled to surpass a significant resistance level and experienced a decline of nearly 5% within a mere three-hour period on Sunday.

The asset spent the majority of the weekend hovering around $91,500, indicating a period of consolidation as the month drew to a close.

However, it unexpectedly dropped to $86,950. The nearly 5% drop came after the first positive weekly candle close in four weeks, with Bitcoin (BTC) finishing the week at $90,411, as reported by Tradingview.

Kobeissi attributed the flash crash to an unexpected surge in selling volume, resulting in a cascading sell-off, further intensified by the unprecedented levels of leveraged positions being liquidated.

Worst November Since 2018

Bitcoin experienced a challenging month, marking its most significant decline of the year and the poorest performance for November since 2018, concluding the month with a drop of 17.49%.

Back in November 2018, the asset experienced a significant drop of 36.57%, amidst a challenging bear market.

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