Bitcoin falls below $90,000 mark: December trend enters a key turning point

Author: Shaw, Jinse Finance

On the morning of December 1, the cryptocurrency market once again experienced a "flash crash." Bitcoin plummeted by over $4,000 within two hours, briefly touching $86,161, with a 24-hour drop of nearly 5%. Ethereum also plunged by more than $200 within two hours, briefly reaching $2,813.20, with a 24-hour decline of over 5.5%. Data shows that in the past 4 hours, total liquidations across the network reached $481 million, with long positions accounting for $462 million and short positions $19.14 million, mainly affecting longs. BTC liquidations amounted to $159 million, and ETH liquidations to $134 million.

December has just begun, and the cryptocurrency market has already dealt a heavy blow to investors, with previously easing panic sentiment spreading again. What is happening in the market? With only one month left in this year, how will the crypto market perform? Will it continue to languish, and is the bear market deepening?

1. Crypto Market Plunges in the Short Term, Longs Suffer Another Bloodbath

This morning, the crypto market once again saw a "flash crash," with Bitcoin, Ethereum, and others plunging sharply. Bitcoin dropped more than $4,000 within two hours, briefly falling below $87,000 and touching $86,161, with a 24-hour decline of nearly 5%. Ethereum plunged over $200 within two hours, briefly falling below $2,900 and touching $2,813.20, with a 24-hour drop of over 5.5%. Solana, BNB, and others also experienced rapid short-term declines.

According to Coinglass data, in the past 4 hours, total liquidations across the network reached $481 million, with long positions accounting for $462 million and short positions $19.14 million, mainly affecting longs. BTC liquidations amounted to $159 million, and ETH liquidations to $134 million. In the past 24 hours, more than 198,000 people were liquidated across the network, with the largest single liquidation occurring on Binance – ETH/USDC, valued at $14.48 million.

The recent rise in expectations for a Federal Reserve rate cut has not been enough to support a sustained rebound in the crypto market. Weak ETF inflows, "whale" investors selling off, long leverage being liquidated again, and continued tightening of domestic policies have all deepened market panic once more.

2. Domestic Regulatory Policies Continue to Tighten, Amplifying Market Panic

The People's Bank of China recently held a meeting of the coordination mechanism for cracking down on virtual currency trading and speculation, attended by officials from thirteen departments including the Ministry of Public Security and the Cyberspace Administration of China. The meeting called for continued adherence to prohibitive policies on virtual currencies and ongoing crackdowns on illegal financial activities related to virtual currencies. The meeting emphasized that virtual currencies do not have the same legal status as fiat currency, are not legal tender, and should not and cannot be used as currency in the market. Business activities related to virtual currencies are considered illegal financial activities. Stablecoins are a form of virtual currency and currently cannot effectively meet requirements for customer identification, anti-money laundering, etc., and are at risk of being used for money laundering, fundraising fraud, and illegal cross-border fund transfers. The meeting required all units to make risk prevention and control an eternal theme of financial work, continue to adhere to prohibitive policies on virtual currencies, and continue to crack down on illegal financial activities related to virtual currencies.

Although this meeting did not introduce new regulatory policies, it once again emphasized the strict domestic ban on virtual currency trading and the strict regulatory requirements for stablecoins.

3. Unstable Macroeconomic Environment Impacts Risk Asset Markets

Bank of Japan Governor Kazuo Ueda stated that the policy committee may raise the benchmark interest rate this month. He emphasized that any rate hike would only be an adjustment to the degree of monetary easing, and authorities will make appropriate decisions on whether to proceed with policy changes. In a speech to local business leaders in Nagoya, central Japan, on Monday, Ueda said that Japan's economy has moderately recovered, inflation is expected to briefly fall below 2% in early fiscal 2026 before accelerating again, and will be roughly in line with the 2% target in the latter half of the outlook period. He said the trend of simultaneous wage and price increases is strengthening, the impact of exchange rates on prices is increasing, and to achieve the price stability target, the easing policy will be adjusted in a timely manner. If the economy and prices continue to improve, further rate hikes will be considered.

According to overnight index swap data, traders expect about a 64% chance that the Bank of Japan will raise rates at the next policy meeting ending December 19. The probability of action by January next year rises to 90%. After Ueda's speech, the yen strengthened slightly against the dollar. Before his speech, as expectations for a Bank of Japan rate hike increased, the yield on two-year Japanese government bonds rose to its highest level since 2008.

The rising expectations of a Bank of Japan rate hike, coupled with the Federal Reserve's rate cut not yet materializing, have introduced uncertainties in the macroeconomic environment, affecting the direction of risk asset markets such as cryptocurrencies.

4. ETF Net Inflows Just Recovered, Institutional Inflows Still Insufficient

According to Farside Investors, U.S. Bitcoin spot ETFs saw a cumulative net inflow of $73.2 million last week, while U.S. Ethereum spot ETFs saw a cumulative net inflow of $312 million last week. However, BlackRock's Bitcoin spot ETF IBIT saw a net outflow of $2.34 billion in November, with about $463 million outflow on November 14 and about $523 million outflow on November 18, both breaking previous single-day outflow records.

Although ETF funds have started to see net inflows, institutional participation has only just resumed, and compared to the previous large-scale outflows, the amounts are still insufficient to support a sustained overall market rebound.

5. Whale "OG" Investors Sell Off, Increasing Downward Pressure on the Market

On-chain analyst @ai_9684xtpa monitored that an ancient ETH whale from 2016, with a cost as low as $203.22, has allegedly sold 7,000 ETH through Wintermute in the past month, with an average transfer price of $3,024, which would yield a profit of $19.745 million if sold. Additionally, on-chain analyst Ai Yi monitored that an address that accumulated 1,074 WBTC at an average price of $10,708 four years ago seems to have started selling ETH after selling all its WBTC. This address previously took profits on 1,000 BTC at an average price of $118,011 this year, earning $107 million. The address deposited 5,000 ETH to Binance, worth $15.36 million, and has deposited a total of 13,403.28 ETH to exchanges in the past two weeks, worth $41.06 million. The address still holds 15,000 ETH.

Recently, whale "OG" addresses have continued to sell large amounts of crypto assets, putting sustained downward pressure on the market and possibly triggering the recent declines.

6. December Bullish Expectations May Stimulate Market Recovery

The Federal Reserve will officially end quantitative tightening (QT) today. It is reported that at the October 29, 2025 FOMC meeting, the Fed decided to end QT starting December 1, 2025. The Fed began tightening monetary policy in March 2022 and started reducing its bond holdings (QT) in June 2022. Since 2022, the Fed has withdrawn over $2 trillion from the market, and its balance sheet has dropped to around $6.55 trillion. But starting December 1, the situation will change, and the Fed will stop withdrawing funds from the market.

In addition, the Fed will announce its latest interest rate decision on December 10. Recent statements from key Fed officials, combined with dovish remarks from the leading candidate for Fed chair in the next Trump administration, have raised market expectations for a 25 basis point rate cut in December. CME "FedWatch" shows an 87.4% probability of a 25 basis point rate cut in December, and a 12.6% probability of rates remaining unchanged. The probability of a cumulative 25 basis point rate cut by January next year is 67.5%, with a 9.2% probability of rates remaining unchanged.

Although the crypto market remains sluggish, potential bullish factors in December may stimulate a slight market recovery.

7. Market Analysis and Interpretation

December has just begun, and cryptocurrencies have already had an "inauspicious start," with the recently eased market panic sentiment showing signs of spreading again. With only one month left in 2025, how will cryptocurrencies develop? Will the bullish factors in December stimulate the market as expected, or will the crypto market's sluggishness continue into 2026? Let's look at the main market interpretations.

1. CryptoQuant's latest research report states that the total supply of ERC20 stablecoins surpassed $160 billion in 2025, a record high, which is considered a key indicator for predicting Bitcoin price trends. The research points out that compared to the global M2 money supply, the correlation between stablecoin supply and Bitcoin price trends is more significant. The report analyzes that stablecoins, as the main source of liquidity in the crypto market, can more quickly and directly reflect investor capital flows, and their supply growth often precedes Bitcoin price increases. During the 2021 bull market and the 2024-2025 market recovery, stablecoin supply growth significantly preceded Bitcoin price increases. The CryptoQuant research team stated that the current stablecoin supply is at a historical high, indicating that underlying market purchasing power continues to strengthen, which may become an important driving force for the next round of Bitcoin price movements.

2. Matrixport's chart analysis indicates that Bitcoin has just entered a rare phase: positions, market sentiment, and macro policy are colliding simultaneously. Implied volatility has dropped sharply, demand for crash protection has subsided, but the price remains below a historically difficult-to-break key level. Meanwhile, an important on-chain cost basis indicator is being tested, a level that has often distinguished "panic" from "deep value" in the past. Adding to the tension, as the Fed's tone shifts and rate cut expectations soar again, history shows this is often when many traders misjudge subsequent trends. Seasonal patterns point in one direction, trend structure supports another, and both are backed by data.

3. Market analyst MisterCrypto believes that market conditions are already in place to push Bitcoin to rebound toward the $100,000–$110,000 range. Bitcoin's short-term structure is showing signs of stabilization after what he calls a "capitulation sell-off." He points out that indicators related to trader behavior show that as market sentiment falls into extreme fear, large players have started opening new long positions, and this combination has historically often signaled a rebound during declines.

4. Bitwise cryptocurrency researcher André Dragosch stated that the macro environment currently facing Bitcoin is "similar" to that during the COVID-19 pandemic. Based on the scale of previous monetary stimulus, global growth expectations will accelerate from here, suggesting that growth momentum will continue into 2026. Bitcoin's current price seems inconsistent with future macroeconomic prospects, so Bitcoin may still have significant upside potential.

5. BitMEX co-founder Arthur Hayes insists on his prediction that Bitcoin (BTC) will rise to $250,000 by the end of the year, an increase of about 170%. Hayes believes Bitcoin has bottomed out, with last week's drop to $80,600 marking the bottom, and it has since rebounded about 12%. Hayes pointed out that the U.S. liquidity tightening cycle is nearing its end, the Fed cut rates by 25 basis points in October, and the market expects QT to end as early as early December, with an 87% probability of another rate cut on December 10. Combined with the reset effect brought by the crypto market's leverage liquidation on October 11, this will provide upward momentum for Bitcoin. Although he admits the prediction may be off, he remains optimistic in the long term.

6. Crypto analyst Ali stated, "Bitcoin (BTC) typically resumes its rise after on-chain traders' losses exceed 37%. Currently, this indicator is at 20%."

7. Cryptocurrency sentiment analysis platform Santiment stated that Ethereum (ETH) may rise by nearly 7% in the short term; their basis is that current stablecoin yields are low, indicating that the crypto market has not yet entered an overheated state. Santiment noted in a report released Saturday: "Currently, stablecoin yields are low, around 4%. This suggests the market has not reached a major top and there is still room for further upside." The platform also predicts that Ethereum may soon test the $3,200 resistance level.