Bitcoin Drops Below $86k as Bearish Start to December Threatens $80k Support
Bitcoin Drops Below $86k: A Bearish Start to December Threatens Critical $80,000 Support Level
Introduction: A Sharp Downturn Opens the Final Month
The cryptocurrency market has opened the final month of 2025 under significant pressure, with Bitcoin leading a broad selloff. The leading digital asset dropped below the $86,000 mark on Monday, December 1, erasing over 5% of its value within a 24-hour period and threatening to test a crucial support level. This bearish performance has not only impacted Bitcoin but has also sent ripples across the altcoin market, contributing to a substantial loss in total market capitalization. The downturn appears to be driven by a confluence of macroeconomic pressures and specific incidents within the crypto ecosystem, setting a cautious tone for December's trading activity.
At press time, Bitcoin was trading just above $86,000 after briefly dipping into the $85,000 region earlier in the day. The selloff triggered massive liquidations and wiped out hundreds of billions from the total crypto market valuation. This article will analyze the immediate catalysts behind this decline, assess the current technical landscape for BTC/USD, and explore the potential near-term trajectories as the market eyes the $80,600 support level.
Macroeconomic Pressures: Bank of Japan Sparks Risk-Off Sentiment
A primary driver behind Monday's market weakness stems from traditional finance. The Bank of Japan (BoJ) Governor, Kazuo Ueda, revealed that possible interest rate hikes could be considered if the nation's economy continues to evolve as predicted. For global markets, including cryptocurrencies, this statement carries significant weight.
The potential for higher interest rates in Japan increases borrowing costs and can negatively affect so-called "carry trades," where investors borrow in a low-yielding currency to invest in higher-yielding assets. Cryptocurrencies, often viewed as higher-risk, high-potential-return assets, can see reduced appeal in such an environment as the cost of capital rises and risk appetite diminishes. This development serves as a reminder of the crypto market's ongoing sensitivity to global monetary policy and macroeconomic signals from major central banks, even those outside the United States or European Union.
Crypto-Specific Catalyst: Yearn Finance Hack Adds to Market Anxiety
Compounding the macro pressures was a significant event within the decentralized finance (DeFi) space. The hacking of the Yearn Finance protocol several hours prior contributed to renewed selling pressure on Bitcoin and the broader cryptocurrency market.
While the direct financial impact of a single DeFi exploit may be contained relative to Bitcoin's total market cap, such events can have outsized psychological effects. They undermine confidence in the broader ecosystem's security and stability, prompting risk reduction across portfolios. Investors and traders often react by moving to cash or stablecoins, or by reducing exposure to perceived riskier assets, which can include Bitcoin during periods of broad uncertainty. This incident highlights how vulnerabilities in one segment of the crypto universe can precipitate selling across seemingly unrelated assets.
Market Impact: Billions Wiped Out in Hours
The combined effect of these catalysts was severe and swift. Data from Watcher.Guru indicated that approximately $140 billion was wiped out from the total cryptocurrency market capitalization in just four hours during the selloff.
Furthermore, the violent price move led to significant leverage unwinding. Approximately $500 million worth of leveraged long and short positions were liquidated across various exchanges within the 24-hour window. These liquidations typically exacerbate price movements; as leveraged long positions are forcibly closed (sold), they create additional selling pressure, pushing prices lower in a feedback loop. This scale of liquidation underscores the highly leveraged state of the current market and its vulnerability to sharp corrections.
Altcoin Performance: Ether and XRP Follow Bitcoin Lower
The bearish sentiment was not confined to Bitcoin. Major altcoins also recorded substantial losses, demonstrating high correlation during the downturn.
Ether (ETH), the second-largest cryptocurrency by market cap, was trading below $2,800 at press time. XRP was reported to be "hanging on above $2.0." This parallel decline is typical during sharp Bitcoin-led corrections, as traders often exit riskier altcoin positions first or use Bitcoin as a benchmark for overall market health. The performance of these major altcoins will be a key indicator to watch for any signs of decoupling or relative strength if a market recovery begins.
Technical Analysis: BTC/USD Chart Turns Bearish
From a technical perspective, the BTC/USD daily chart confirmed a bearish bias following Monday's drop. The daily, weekly, and monthly candles all pointed towards selling pressure at the time of reporting.
Key indicators flashed warning signs:
- The Relative Strength Index (RSI) on the daily chart was reading 32 and pivoting downward toward oversold territory (below 30). Historically, an RSI remaining below 30 can indicate sustained selling pressure before any potential reversal.
- The Moving Average Convergence Divergence (MACD) indicator had shifted to reflect bearish momentum, with a sell signal appearing several hours prior.
This technical setup suggests that bears have gained control in the short term. The immediate focus for traders is whether Bitcoin can hold above its recent lows or if further downside is imminent.
Critical Support Levels: The Path Toward $80k
The technical structure points to clear levels that traders are monitoring. If the current selloff continues, analysts identified the $80,600 price point as the next critical support level for bears to target in the near term.
A failure for buyers to defend this $80,600 support could open the door for Bitcoin to revisit lower levels. Specifically mentioned was the April 7 low of $74,508, which would represent a more significant correction from recent highs. Conversely, if bullish momentum recovers, a rebound toward $90,000 was cited as a potential near-term resistance target over the coming hours or days. The battle between these two scenarios will define Bitcoin's price action as December progresses.
Historical Context: December Volatility and Year-End Trends
While each market cycle is unique, December has historically been a month of notable volatility for Bitcoin. It has seen both dramatic bull runs and steep corrections in past years. This historical precedent does not predict future performance but reminds investors that year-end price action can be influenced by factors like tax-loss harvesting in some jurisdictions, institutional portfolio rebalancing, and altered liquidity conditions.
The current attempt to hold above $80k finds context in Bitcoin's performance throughout 2025. Maintaining support above this psychological round number could be crucial for sustaining the broader bullish narrative that has prevailed for much of the year.
Conclusion: Navigating Uncertainty at Year-End
Bitcoin's drop below $86k marks a bearish initiation to December 2025, driven by external macroeconomic commentary from Japan's central bank and internal stress from a high-profile DeFi exploit. The resulting selloff erased over $140 billion from total market capitalization and liquidated half a billion dollars in leveraged positions.
For market participants, the immediate focus shifts to key technical levels. The defense or breach of the $80,600 support will be paramount in determining whether this is a short-term correction within a larger uptrend or the beginning of a deeper retracement toward April's lows near $74,500.
What to Watch Next:
- Macro Developments: Further commentary from global central banks on interest rate policies.
- Technical Levels: Bitcoin's price action around $86k and $80.6k for signs of consolidation or breakdown.
- Market Correlation: Whether altcoins like Ether and XRP continue to mirror Bitcoin's moves or begin showing independent strength.
- On-Chain Data: Exchange flows and wallet activity to gauge if large holders (whales) are accumulating at lower prices or distributing.
- Ecosystem News: Any further developments regarding security across DeFi protocols and their impact on investor sentiment.
The coming days will be critical in assessing whether this is a transient shake-out or a more sustained shift in market structure as 2025 draws to a close.