Bitcoin fell below $86,000, triggering renewed volatility in December

Bitcoin dropped below $86,000 on Monday, the steepest decline in weeks and an indicator of a renewed wave of volatility as a December selloff impacts the broader crypto market. The decline wiped out last week’s advances and was part of a broader decline in other major digital assets.

The drop occurred in early Asian trading, where Bitcoin briefly dipped near its intraday lows of $85,778. The sell-off of the early Asian session led to liquidations exceeding $400 million in leveraged crypto futures, resulting in a roughly 4% decline in global digital asset market value to around $3 trillion. This suggests many traders had bet on a price rebound and were caught off guard by the sudden downturn.

Major tokens slide as November’s steep losses deepen market fragility

According to CoinMarketCap, Ether dipped more than 6% to below $2,900. It is worth noting that most tokens followed a similar pattern, with Solana experiencing a decline of almost 7%.

The latest drop follows a punishing November as Bitcoin ended the month with an 18% decline, its worst performance since March. This is despite the leading crypto rebounding from almost $80,000 to above $90,000. Ether was not spared as it fared even worse, sinking 22% for its steepest monthly loss since February.

The market remains fragile after roughly $19 billion in leveraged positions were wiped out in early October, just days after Bitcoin reached a record high of $126,251. Bitcoin fell in November and then briefly stabilized last week, returning to above $90,000. The last wave of sellers has traders getting ready for further declines.

“It’s a risk off start to December,” noted Sean McNulty, APAC derivatives trading lead at FalconX. “The biggest concern is the meagre inflows into Bitcoin exchange traded funds and absence of dip buyers. We expect the structural headwinds to continue this month. We are watching $80,000 on Bitcoin as the next key support level.”

Investor sentiment was further tested by comments from Strategy Inc. CEO Phong Le, who said on Friday that the company could sell Bitcoin if its mNAV — enterprise value relative to Bitcoin holdings — falls below 1. “We can sell Bitcoin and we would sell Bitcoin if we needed to to fund our dividend payments below 1x mNAV,” he said, stressing that it would be a last resort. Strategy, which holds $56 billion Bitcoin stockpile, has seen its mNAV tumble to 1.19, according to its website.

Weak ETF inflows and fresh stability fears fuel December volatility

Adding to the pressure, S&P Global Ratings downgraded its stability assessment of USDT, the world’s largest stablecoin, to its lowest level last week, warning that a deeper drop in Bitcoin could leave the token undercollateralized.

Still, Tether CEO Paolo Ardoino hit back shortly after the S&P move, saying the company wears critics’ loathing with pride. Noting the repeated failures of ratings agency models, he said the traditional finance propaganda machine is growing worried when any company tries to defy the force of gravity of the broken financial system. He added that Tether instead built the first overcapitalized company in the financial industry, with no toxic reserves.

This week will provide a key read on US economic momentum as policymakers evaluate the path for interest rates into 2026. The data could influence expectations for further Federal Reserve cuts. President Donald Trump said Sunday he has decided on his choice for the next Fed chair, after signaling that he expects the nominee to support lower rates.

Asian equities were mixed on Monday after logging their best weekly performance in two months. Japanese stocks declined and the yen strengthened as Bank of Japan Governor Kazuo Ueda delivered his clearest indication yet of a possible rate hike this month.

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