Key Takeaways
- Bitcoin plunged below $88,000, extending a month-long market decline of nearly 20%.
- Leveraged liquidations and fears of a Bank of Japan rate hike triggered the sell-off.
- Traders are now watching the $80,000 level as the next critical support for Bitcoin.
The cryptocurrency market opened December with a sharp sell-off, as Bitcoin fell over 4% to drop below $88,000. Ethereum saw steeper losses, declining around 6%.
This decline extends a broader 30-day slump where the crypto market has lost nearly 20% of its value. The drop has been amplified by the unwinding of leveraged positions, with $16 million in Bitcoin long positions liquidated in 24 hours.
What Triggered the Crypto Sell-Off?
Market analysts point to several macro factors. A primary concern is the potential for the Bank of Japan to hike interest rates, a move that has triggered sell-offs across Asian markets. This comes on the heels of a massive $19 billion wipeout of leveraged bets in early October.
Crypto Price Check: Major Tokens Slide
Here is a snapshot of the top cryptocurrencies at the time of writing:
- Bitcoin (BTC): Down 4.63% at $86,440.40. Market cap: $1.72 trillion.
- Ethereum (ETH): Down 5.07% at $2,830.06. Market cap: $341.57 billion.
- Tether (USDT): Stable at $1. Market cap: $184.65 billion.
- XRP: Down 6.55% at $2.05. Market cap: $123.94 billion.
- Binance Coin (BNB): Down 4.71% at $831.89. Market cap: $114.58 billion.
Technical analysis indicates Bitcoin has breached a critical support level at $90,954, accelerating selling pressure. The focus is now on whether liquidations will push it toward its October low near $80,659.
Trader Sentiment: “A Risk-Off Start to December”
After Monday’s sell-off, traders are preparing for further downside.
“It’s a risk off start to December,” said 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.”
Broader Market Context
The week ahead holds key US economic data that will shape expectations for the Federal Reserve’s interest rate trajectory. This comes as US President Donald Trump announced he has chosen his nominee for the next Fed chair, emphasizing his desire for rate cuts.
Asian equity markets were mixed in early trading, while S&P 500 futures pointed to a lower open.
(With inputs from Bloomberg)
