Bitcoin fell more than 5% on Monday, briefly slipping below $86,000 and triggering a sharp selloff across the global crypto market. The sudden decline erased last week’s gains and pushed the total market capitalization back under $3 trillion. Moreover, the drop highlighted how sensitive investors remain to shifts in global monetary policy.
The broader market also reacted strongly, with Ether sliding 5.56% to $2,840 and major altcoins like Solana, XRP, and BNB falling between 5% and 7%. Additionally, the steep decline led to nearly $646 million in liquidations within 24 hours, with the majority of wiped-out positions coming from bullish traders. This wave of liquidation further accelerated the downward pressure on prices.
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Several factors contributed to the market panic, beginning with rising Japanese bond yields and expectations of a Bank of Japan rate hike. This strengthened the yen and forced investors to unwind risky “carry trades” that had previously boosted crypto demand. Furthermore, a $9 million hack targeting Yearn Finance added negative sentiment, shaking confidence among retail and institutional traders.
Asian markets also reacted cautiously after a weekend warning from the People’s Bank of China about illegal digital currency activity. Meanwhile, uncertainty surrounding U.S. interest rates and stretched valuations in tech and AI sectors created additional pressure. As December begins, analysts say investors are becoming more defensive amid growing macroeconomic concerns.
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Last month was already one of Bitcoin’s most volatile periods since the 2021 crash, and this latest decline continues that trend. Some analysts now warn that Bitcoin could retest the $80,000 support level before finding stability. Consequently, traders are closely watching signals from the Bank of Japan and the U.S. Federal Reserve to determine whether the crypto market can regain momentum or face further losses ahead.