The crypto market opened December under severe pressure as nearly $1 billion in leveraged positions were wiped out in a single day, triggering renewed fears that the ongoing downturn could deepen into something more systemic. Bitcoin fell as much as 8% to $83,824 in New York, extending its year-to-date decline to more than 9%, while Ether slid 10% to $2,719. The sharp moves reinforced the fragility of sentiment across digital assets at a moment when liquidity is thinning, speculation is unwinding, and macro uncertainty is accelerating.

Leveraged Bets Unwind as Liquidation Pressures Intensify

Monday’s rout marks the latest chapter in a selloff that began in early October, when more than $19 billion in leveraged crypto bets evaporated within days as markets reacted to President Donald Trump’s tariff threats. Bitcoin had just set an all-time high of $126,251, leaving large amounts of borrowed capital vulnerable to abrupt price swings. Analysts note that the market is still dealing with the aftershocks of that liquidation cascade, with risk appetite steadily declining as traders attempt to quantify how much leverage remains.

Complicating the picture is the lack of transparency from exchanges regarding total outstanding leverage. Industry insiders have long warned that some platforms disclose only partial liquidation data, making it increasingly difficult for professional traders to assess systemic risk. As long as data remains incomplete, confidence in the market’s ability to absorb further shocks is limited.

Macro Shifts Add New Stress to Digital Assets

The crypto downturn is unfolding in parallel with notable macroeconomic shifts across global markets. Equities retreated early Monday as Japan’s yen strengthened after Bank of Japan Governor Kazuo Ueda signaled the clearest intent yet of an imminent rate hike. With US equity futures also under pressure, digital assets found themselves caught in a broader risk-off wave.

Market participants say the cross-asset influence is intensifying. Expectations for a Federal Reserve rate cut in December, which had briefly dropped to 30% last week, climbed again as investors recalibrated their outlook in response to weakening economic signals. With both the BOJ and the Fed moving in opposite directions, volatility in foreign exchange and rates has quickly filtered into crypto markets.

Investor Behavior Shifts as Structurally Weak Spots Emerge

Signs of stress are appearing across key crypto-linked companies. Strategy Inc., the largest public corporate holder of Bitcoin, said Monday it had created a $1.4 billion reserve to avoid forced selling of its holdings. The firm’s mNAV ratio — a measure comparing enterprise value to its Bitcoin reserve — has fallen to near parity, raising fears it could turn negative. Shares of Strategy sank more than 10% and are down 66% since peaking in late 2024.

Meanwhile, spot Bitcoin ETFs — once a stabilizing force — are sending mixed signals. After $4.6 billion in outflows over the past month, the group saw only a modest $70 million of inflows last week. The iShares Bitcoin Trust has suffered five consecutive weeks of withdrawals, its longest streak since launching in January 2024.

Regulatory anxiety is amplifying uncertainty. S&P Global Ratings downgraded its stability assessment of USDT to its lowest level, warning that a further drop in Bitcoin could leave the world’s largest stablecoin undercollateralized. In China, the People’s Bank of China reiterated concerns about virtual currencies and urged tighter interagency coordination to combat illegal activity.

Looking Ahead

With December historically volatile and leverage still embedded in the system, traders are watching whether Bitcoin can hold the $80,000 support level. Upcoming US economic data may influence expectations for 2026 monetary policy, shaping whether risk appetite recovers into year-end. While some market participants see tentative signs of stabilization, macro swings, regulatory scrutiny, and ETF outflows continue to challenge the path toward a sustained rebound.