Nearly $1 Billion In Crypto Bets Wiped Out As Bitcoin Slides Below $86,000 Mark

Bitcoin dropped below $86,000 on Monday as nearly $1 billion in leveraged cryptocurrency positions were liquidated, extending a selloff that has erased almost 30% of the token's value since early October. The decline brought fresh momentum to a weeks-long downturn that has rattled digital asset markets and forced major institutional holders to reassure investors about their financial stability.

What Happened: Market Liquidation

Bitcoin fell as much as 8% to $83,824 in New York trading on Monday, while Ether dropped 10% to $2,719. The cryptocurrency market has been under pressure since early October, when approximately $19 billion in leveraged bets were wiped out just days after Bitcoin reached an all-time high of $126,251.

Ether has declined 36% over the past seven weeks, and smaller tokens have fared worse, with a MarketVector index tracking the bottom half of the largest 100 digital assets down almost 70% this year.

Michael Saylor's Strategy Inc. announced Monday it had created a $1.4 billion reserve to fund future dividend and interest payments, attempting to address concerns the company might be forced to sell portions of its roughly $56 billion cryptocurrency holdings if prices continue falling.

The company's mNAV—a valuation metric comparing enterprise value to Bitcoin holdings—stood at approximately 1.11 on Monday, raising fears it could turn negative. Strategy shares tumbled more than 10% Monday and have declined around 66% since reaching an all-time high in November 2024. The company also raised the yield on its variable rate Series A perpetual preferred stock to 10.75%.

U.S. spot Bitcoin exchange-traded funds attracted just $70 million last week following roughly $4.6 billion in outflows over the past month.

The iShares Bitcoin Trust has experienced investor withdrawals for five consecutive weeks, marking the longest such streak since the fund launched in January 2024. Meanwhile, S&P Global Ratings downgraded its assessment of USDT, the world's largest stablecoin, to its lowest rating, warning that a Bitcoin value decline could leave the token undercollateralized.

Also Read: Satoshi-Era Coins Move For First Time In 15.7 Years During Mining's 'Harshest Environment Of All Time'

Why It Matters: Leverage Concerns

"It's a risk off start to December," said Sean McNulty, APAC derivatives trading lead at FalconX. "The biggest concern is the meager 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."

The cryptocurrency downturn reflects broader shifts in global markets as central banks adjust monetary policy.

Bank of Japan Governor Kazuo Ueda sent the clearest signal yet of a rate hike this month, while markets now anticipate the Federal Reserve will resume rate cuts after a brief period of uncertainty.

Karim Dandashy, an over-the-counter trader at crypto trading firm Flowdesk, noted that investors are focused on the path forward for global monetary policy as December begins. He added there appears to be "a light at the end of the tunnel" as the market enters year-end, though whether economic data can support expectations for a risk rally remains uncertain.