Investors cut risk as heavy liquidations, weak ETF inflows and macro jitters hit digital assets
Bitcoin’s steep drop is flashing another warning for risk assets as heavy leverage, weak ETF inflows and macro uncertainty collide at the start of December.
Bitcoin fell as much as 8 percent on Monday to US$83,879.01 before trading about 6 percent lower near US$85,788, putting it on track for its biggest one‑day loss since early November.
Reuters also said the move followed Bitcoin’s largest monthly decline since mid‑2021, with more than US$18,000 wiped from its price in November in its biggest dollar loss since May 2021.
Other major tokens sold off as well.
Ether was recently down 8.8 percent at about US$2,756 and lost roughly 22 percent in November, its worst month since a 32 percent slide in February, according to Reuters.
CNBC reported that Solana dropped more than 9 percent to below US$125, with other closely watched tokens also in the red.
According to CoinGlass data cited by Reuters, long and short crypto liquidations over the past 24 hours approached US$1bn, underscoring how leverage is amplifying the downside.
Ben Emons, founder and CIO of Fedwatch Advisors, linked Monday’s reversal in part to a US$400m exchange liquidation and highlighted “sizable leverage” on Bitcoin exchanges, in some cases up to 200x.
He told CNBC there is still “a lot of leverage in Bitcoin” outstanding and warned that more liquidations are likely if prices stay near current lows.
Bloomberg quoted Sean McNulty, APAC derivatives trading lead at FalconX, as saying “it’s a risk off start to December.”
He told Bloomberg the “biggest concern is the meagre inflows into Bitcoin exchange traded funds and absence of dip buyers,” adding that his team expects structural headwinds to persist this month and is watching US$80,000 as the next key support level.
According to Reuters, CME Bitcoin futures are also signalling caution, with contracts that expire in three months trading at their smallest premium to near‑month futures in at least a year.
Jefferies strategist Mohit Kumar told Reuters that several crypto‑negative factors are weighing on sentiment, including S&P Global’s downgrade of Tether, the world’s largest stablecoin, which cited more higher‑risk assets in reserves and “persistent gaps in disclosure.”
Reuters said Tether “strongly disagrees” with the assessment.
Coinbase Global shares fell 4.8 percent and that since the crypto market peaked at about US$4.3tn in size, more than US$1tn in value has been erased, based on CoinGecko data.
Strategists continue to debate how far crypto is leading broader risk sentiment.
XTB research director Kathleen Brooks wrote that “Bitcoin tends to be a leading indicator for overall risk sentiment right now, and its slide does not bode well for stocks at the start of this month”.
At the same time, Joe Saluzzi, co‑founder of Themis Trading in Chatham, New Jersey, told Reuters that while crypto and equities can intersect via ETFs, they are not always tightly correlated and noted that equity indices were only moderately lower on Monday while crypto‑related assets sold off more sharply.
CNBC reported that Emons has seen Bitcoin show greater correlation at times with indices including the Nasdaq, particularly during October’s crypto selloff, which he said also affected the stock market.
According to Reuters, MSCI’s global equity gauge fell about 0.40 percent on Monday and the S&P 500 closed 0.5 percent lower, as concerns about exuberance in artificial‑intelligence trades and lofty technology valuations lingered.
Bloomberg said an Asian equity benchmark fluctuated in early trading after its best weekly advance in about two months, while S&P 500 futures edged lower.
Macro and policy risks remain a key backdrop.
Economic data in the coming week will shape expectations for whether the US Federal Reserve continues its rate‑cutting cycle into 2026.
Bloomberg also said US President Donald Trump has chosen his pick for the next Fed chair and has made clear he expects that nominee to deliver interest‑rate cuts.
CNBC noted that uncertainty over potential US rate cuts and doubts about overheated AI‑linked valuations contributed to choppy markets in November as crypto volatility increased.
In Asia, CNBC reported that a statement from the People’s Bank of China warning about illegal activities related to digital currencies weighed on Hong Kong‑listed digital‑asset stocks, which retreated on Monday.
Marc Chandler, chief market strategist at Bannockburn Capital Markets in New York, told Reuters that the key point is that “people are talking about” what is happening to Bitcoin.
He said that many are trying to link the crypto selloff to losses in other asset classes but argued that “we need to test the narrative” because the relationship is “just not clear,” even if “we have to pay attention to it.”
