Bitcoin tumbled to $85,800 at the start of Asian trading Monday, erasing roughly $140 billion from the cryptocurrency market and triggering over $350 million in forced liquidations as December opened with sharp volatility.
The largest cryptocurrency fell nearly 13% from its weekend levels before stabilizing, while Ethereum dropped to $2,800, Solana to $126, and BNB to $822, per Coinmarketcap data. Total cryptocurrency market capitalization slid to $2.92 trillion as the selloff rippled across digital assets.
The decline occurred as gold surged past $4,250 per ounce, suggesting investors are rotating toward traditional safe-haven assets amid uncertainty over Federal Reserve policy and global economic conditions. The precious metal's rally competes with cryptocurrencies for risk capital, particularly as macro liquidity conditions tighten.
Trading volume spiked during the washout before subsiding as buyers tested lower price levels. The move appeared driven by liquidations of leveraged long positions rather than fundamental news, a pattern that typically indicates overcrowded trades being forced to unwind.
Blockchain data shows contrasting investor behavior. Large wallet holders and long-term investors have slowed accumulation, while smaller retail wallets holding less than 0.1 Bitcoin continue adding at reduced prices – a late-cycle pattern that can increase market fragility in the short term.
Exchange balances ticked higher as stablecoin reserves on trading platforms rose, indicating potential buying capacity but also suggesting sellers found liquidity at lower levels. Short-term holders realized significant losses during the drop, marking an emotional reset for recent buyers.
Bitcoin now trades below the average cost basis for short-term holders, a threshold that historically signals distress among newer market participants. The cryptocurrency must reclaim levels above $90,000 to signal stabilization; failure to do so opens the path toward the low-$80,000 range.
The timing adds complexity as markets digest a heavy economic calendar this week. U.S. manufacturing and services data, employment figures, and inflation indicators will shape Federal Reserve policy expectations and could drive additional headline-driven volatility across risk assets.
Exchange-traded funds tracking Bitcoin have experienced mixed flows in recent sessions, while funding rates in futures markets had elevated before the crash, suggesting leverage had built up across derivatives platforms.
Cryptocurrency markets have historically exhibited heightened volatility in December, with thin liquidity during holiday periods amplifying price swings. Bitcoin remains up roughly 90% year-to-date despite Monday's decline, though it has fallen approximately 20% from its all-time high reached in mid-November.
