On the morning of December 1st, the cryptocurrency market once again witnessed a "battle royale" scenario.
Bitcoin plunged more than 5% in early Asian trading, falling below the $87,000 mark ; Ethereum was not spared either, falling more than 5% and breaching the psychological level of $2,900 .
This sell-off has swept across the entire crypto market. According to Coinglass data, in just 24 hours, the total liquidation volume of cryptocurrency futures contracts reached $528 million, with over 190,000 people liquidated. This protracted sell-off, which began in early October, has already wiped out trillions of dollars from the total market capitalization of the cryptocurrency market, with Bitcoin falling by more than 30% from its all-time high of $126,251 reached on October 6.
Market Overview: Crypto Market Suffers a "Disappointing Start to December"
Monday morning's plunge marked the most difficult start to December for the cryptocurrency market. Bitcoin broke through all key support levels, including $90,000, $89,000, and finally $88,000 , showing a clear bearish technical pattern.
As of press time, Bitcoin was trading around $87,100, down nearly 4% on the day, while Ethereum was even weaker, breaking below the key support level of $2,900 and currently trading around $2,850, down 5% in the last 24 hours.
Not only did mainstream cryptocurrencies suffer heavy losses, but the Altcoin market was even more devastated. Layer 2 cryptocurrencies led the decline, falling nearly 8%, with Starknet (STRK) dropping 13.13% and zkSync (ZK) falling 10.99%. XRP and Dogecoin fell over 6%, while Solana and Cardano fell nearly 6%, showing a widespread decline. This crash was not an isolated incident. Since early October, the cryptocurrency market has been under continuous selling pressure for several weeks.
This multi-week sell-off began in early October when approximately $19 billion in leveraged betting positions were liquidated, just days after Bitcoin hit an all-time high of $126,251. Market sentiment was already somewhat cautious after a brief rebound in late November, but the black swan event at the start of December completely reversed market expectations.
Direct triggers: Rumors of Powell's resignation and uncertainty surrounding the change of Federal Reserve chairman.
Rumors played a significant role in fueling Monday's sharp decline.
A short article claimed that " Powell will announce his resignation at an emergency meeting at 7 p.m. Eastern Time on December 1 ," a message that quickly triggered panic in the market.
Although this rumor is most likely false—as of now, no major international media outlets have reported on it—in an already fragile market, any negative rumor can be the final straw that breaks the camel's back.
More noteworthy is that US President Trump stated on Sunday that he has decided on his next Federal Reserve Chairman. Trump had previously made it clear that he hopes his nominee will be able to push for interest rate cuts. Some media reports suggest that Trump's chief economic advisor, Kevin Hassett, director of the White House National Economic Council, is considered a possible successor to Powell.
In a November 30 interview with CBS, Hassett stated, "We just had a successful Treasury auction, and rates have come down. I think the American people have reason to expect Trump to nominate someone who can help people get lower-interest auto loans and make it easier to apply for low-interest mortgages." Uncertainty surrounding the Federal Reserve leadership comes at an exceptionally sensitive time. As policymakers head towards 2026, assessing interest rate trends, economic data to be released in the coming week could influence market expectations regarding whether the Fed will continue its rate-cutting cycle.
Underlying reasons: the decline of leverage and structural fragility
The recent cryptocurrency crash is an inevitable eruption of inherent structural contradictions within the market. Yu Jianing, a director of the Hong Kong Registered Digital Asset Analysts Association, pointed out, " This decline is the result of a combination of cooling market sentiment and the slowdown in leverage ." The retreat of leverage has created a vicious cycle.
The flash crash on October 11th witnessed the largest forced liquidation in history, with major global exchanges liquidating over $19 billion in crypto assets. According to CryptoQuant data, long-term Bitcoin holders have sold over 320,000 BTC in the past month, reflecting weak market confidence and liquidity pressures.
Sean McNulty, Head of Derivatives Trading for Asia Pacific at FalconX, stated, “ December started with a clear risk-averse mode . The biggest concern is the rather weak inflows into Bitcoin exchange-traded funds (ETFs) and the absence of bargain hunters. We expect structural headwinds to continue this month.” According to Bloomberg, investors withdrew more than $700 million from digital asset ETFs in the past week alone, with nearly $600 million flowing out of BlackRock’s Bitcoin fund. This outflow is not limited to the cryptocurrency market but reflects the pressure faced by the entire high-risk asset sector.
The recent sharp fluctuations in the cryptocurrency market are not accidental, but rather an inevitable eruption of its inherent structural contradictions. Behind this decline lies a deep-seated systemic predicament, suggesting that cryptocurrencies may be entering a long-term bear market.
Macroeconomic Environment: Federal Reserve Policy and Tightening Global Liquidity
The cryptocurrency market crash is inseparable from the changes in the macroeconomic environment. The aggressive monetary tightening cycles of major central banks around the world have completely altered the situation of abundant liquidity in the past few years.
Wang Peng, associate researcher at the Beijing Academy of Social Sciences, stated, "The sharp correction in Bitcoin prices, erasing all of last year's gains, is primarily due to the marginal tightening of dollar liquidity. A shift in Federal Reserve policy expectations, a cooling of market expectations for interest rate cuts, and rising funding costs directly impacting highly volatile assets have forced institutional investors to reduce leveraged positions, intensifying selling pressure." According to CME's FedWatch tool, as of the end of November, the probability of a 25 basis point rate cut by the Federal Reserve in December had risen to 84.9%.
However, market doubts remain about whether the Federal Reserve will continue its rate-cutting cycle, and the economic data to be released in the coming week will be a key influencing factor. The Trump administration's trade policies have also exacerbated market concerns . After taking office, Trump quickly announced increased tariffs and export controls on China, particularly targeting industrial and strategic materials. This directly triggered global trade tensions, potential supply chain disruptions, and rising inflationary pressures. In this complex environment, Bitcoin's "digital gold" narrative faces severe challenges.
Technical Analysis: Key support level breached, downside risks intensified.
From a technical analysis perspective, Bitcoin's price movement is worrying. The daily chart clearly shows a bearish trend , with the price breaking below the Bollinger Band's middle line support and moving towards the lower band. The narrowing Bollinger Bands indicate decreasing volatility. More importantly, the 50-day and 200-day moving averages have formed a death cross, a bearish signal in the medium to long term. Bitcoin formed a "death cross" on November 16th, where the 50-day moving average crossed below the 200-day moving average, historically often foreshadowing a deepening bear market.
Earlier this month, Bitcoin also fell below its 50-week moving average (around $103,000), a key level that prompted many technical traders to join the sell-off. Sean McNulty stated, "We are watching the $80,000 level for Bitcoin as the next key support." This view is shared by most technical analysts.
If Bitcoin falls below $82,000, the next support level will be around $70,000, while institutional support lies at $85,000, the area with significant ETF inflows. Ethereum's technical chart also shows a clear weakness . The TD Sequential indicator has generated a sell signal on the 1-hour permanent futures chart, indicating weakening short-term upward momentum. The RSI indicator has fallen rapidly from overbought territory, showing increasing bearish momentum. This decline was accompanied by a moderate increase in trading volume, indicating some panic selling. While the MACD indicator remains positive, the shortening histogram suggests weakening upward momentum.
Future Outlook: Where is the Market Bottom?
Faced with the continued market sell-off, the question investors are most concerned about is: Where is the market bottom? The $80,000 mark has become the next key support level .
If this support level is broken, the market could see further declines. The coming week will provide a key glimpse into the momentum of the US economy, as policymakers weigh the trajectory of interest rates through 2026. Data could influence market expectations regarding whether the Federal Reserve will continue its rate-cutting cycle.
In the long run, the fundamentals of the Bitcoin market remain intact. Global asset diversification trends, the increasing flow of long-term capital, and rising institutional participation all contribute to the potential for future Bitcoin price increases.
However, in the short term, a recovery in market confidence requires more positive signals. These include a return to net inflows into ETFs, a return of the risk-reward ratio for short-term holders to above 1 , a recovery in spot order book depth, and a renewed increase in stablecoin supply.
When these indicators light up one by one, it may mean that the market is bottoming out and rebounding.
Bitcoin's dramatic price fluctuations serve as a stress test for decentralized currency systems in the financial markets. These fluctuations not only reflect changes in liquidity but also reveal the fragility of traditional financial systems. For Bitcoin to become a mainstream asset in the future, it needs to undergo a narrative reconstruction, a process that may be accompanied by more intense market volatility and regulatory maneuvering.
The coming week will be crucial for investors. The interplay between US economic data and Federal Reserve policy signals will determine whether the cryptocurrency market can hold its ground near the key support level of $80,000.
