Bitcoin tumbled below $84,000 on Monday as Asian trading triggered a cascade of liquidations, erasing nearly $140 billion from the cryptocurrency market and raising questions about whether the digital asset can end 2025 in positive territory.
The largest cryptocurrency by market capitalization fell as low as $83,814 on Bitstamp, with daily losses exceeding 7% as Wall Street traders returned from Thanksgiving to find crypto markets under severe pressure. Over $600 million in leveraged positions were liquidated in 24 hours, according to CoinGlass data, with approximately $400 million wiped out in a single hour during the Asian session.
The selloff comes amid multiple macro headwinds converging simultaneously. Bank of Japan Governor Kazuo Ueda signaled Monday that the central bank is considering raising interest rates at its December 18-19 meeting, sending shockwaves through risk asset markets. Following his remarks, markets priced in a 76% probability of a rate hike, up from 58% before the speech.
Adding to crypto market stress, DeFi protocol Yearn Finance suffered a $9 million exploit over the weekend when attackers exploited an infinite-mint vulnerability in its yETH contract. Approximately 1,000 ETH worth roughly $3 million was routed through privacy mixer Tornado Cash, contributing to broader market anxiety about security vulnerabilities in decentralized finance.
What Happened
Bitcoin's decline accelerated as thin liquidity conditions amplified selling pressure. The cryptocurrency fell from weekend levels above $90,000, testing critical support at $86,000 before breaking lower to $83,814 on Bitstamp exchange.
Trading firm QCP Capital noted in its market update that "the selloff was triggered by a string of bearish developments across Asia," pointing to Japan's potential interest rate hike, thin market liquidity following the U.S. Thanksgiving holiday, and speculation about Strategy's bitcoin holdings as key factors weighing on prices.
The timing of the selloff coincided with the Federal Reserve's formal end of quantitative tightening on December 1, which theoretically should support risk assets by improving liquidity conditions. However, the immediate impact was overshadowed by international macro pressures.
The Yearn Finance exploit added fuel to the fire. Attackers minted 235 trillion yETH tokens through a mathematical vulnerability in the protocol's Newton-Raphson solver function, then drained Balancer pools of real ETH and liquid staking derivatives. The protocol confirmed that only legacy yETH products were affected, with V2 and V3 vaults remaining secure.
Market indicators painted a bearish picture. The Coinbase Premium, which measures price differences between Coinbase and other exchanges, flipped negative after just three days of positive readings, signaling reduced U.S. institutional buying pressure.
Bitcoin's 24-hour trading volume surged 46% to $55 billion as the selloff intensified, with the cryptocurrency's market capitalization dropping to approximately $1.7 trillion. The digital asset now trades 32% below its October all-time high of $126,210.
Also read: BNB Trading Near $810 After Losing 40% From October Peak Amid Heavy Selling
Why It Matters
The December 1 selloff marks a critical test for Bitcoin's 2025 performance trajectory. QCP Capital emphasized that "the next few sessions will be pivotal in determining whether BTC can end 2025 in the green," highlighting the psychological importance of maintaining support levels above $85,000.
Technical traders identified $85,200 as a crucial threshold. Popular trader Killa warned followers that losing this level would keep market structure "in bearish territory," while reclaiming the previous weekly open at $86,800 could signal renewed strength.
The convergence of macro factors creates a complex environment for cryptocurrency markets. While the Fed's end of quantitative tightening should theoretically support risk assets by stabilizing bank reserves and improving market liquidity, the Bank of Japan's hawkish turn represents a significant headwind for global markets.
Japan's potential rate increase from its current 0.50% benchmark would mark a continuation of the nation's exit from decades of ultra-accommodative monetary policy. Governor Ueda emphasized that delaying rate adjustments too long could cause sharp inflation and force rapid policy changes, suggesting the central bank is preparing to act despite market volatility.
For cryptocurrency investors, the Yearn Finance exploit serves as a reminder of persistent security risks in decentralized finance. The incident highlights how legacy smart contract vulnerabilities can trigger market-wide selling pressure, particularly when combined with unfavorable macro conditions.
Some market participants see opportunity in the weakness. Crypto trader Michaël van de Poppe described Bitcoin trading below $90,000 as "a massive opportunity to be scooping cheap positions," arguing that the market is forming a bottom that takes time to finalize.
However, bearish forecasts have gained traction. Trader Roman called a return to $50,000 "inevitable," while veteran analyst Peter Brandt suggested support zones extending down to the mid-$40,000 range, raising concerns about deeper corrections ahead.
The cryptocurrency remains up approximately 90% year-to-date despite Monday's decline, though it has fallen roughly 28% from its October peak. Whether Bitcoin can defend current support levels and recover into year-end will likely depend on how quickly Asian macro pressures ease and whether U.S. institutional demand returns through spot Bitcoin ETF inflows.
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