Bitcoin Drops 6% on December 1st, Marking the Largest Monthly Decline in Four Years. Analyzing the Causes of the Crash, China's Influence, Market Reactions, and Consequences for Investors.
On Monday, December 1, 2025, Bitcoin experienced one of its largest single-day drops in recent times. During trading, the price of the leading cryptocurrency fell approximately 6%, reaching around $84,000 before bouncing back above $90,000. This mass sell-off occurred amid significant liquidation of long positions, with trades amounting to about $1 billion closed within 24 hours, exacerbating the market decline.
- China's Influence: The People's Bank of China reaffirmed the illegal status of cryptocurrencies, stating that they "do not possess the same legal status as fiat" and that any related activities are considered illegal financial actions.
- Liquidation of Long Positions: Many traders had opened long positions over the weekend, and as trading commenced, algorithmic stop orders triggered a chain liquidation of trades, intensifying the drop.
- Flight from Risky Assets: In a climate of growing pessimism in global markets, investors began to abandon risky assets en masse, further amplifying the pressure on cryptocurrencies in conjunction with the aforementioned factors.
October Record and November Decline
At the beginning of October 2025, Bitcoin reached its all-time high of approximately $126,000. However, by the end of November, the leading cryptocurrency had plummeted by around $18,000 for the month, marking the largest monthly decline since 2021. Combined with the December crash, this indicates that Bitcoin's price has dropped nearly 30% over the past two months.
China and the Illegal Status of Cryptocurrencies
On November 28, the People's Bank of China reiterated the ban on cryptocurrencies during an official meeting: "virtual currencies do not possess the same legal status as fiat and cannot be used as legal tender," and associated activities are deemed illegal financial conduct. This statement from Chinese regulators heightened investor concerns and acted as a catalyst for the sell-off.
Institutional and Investment Factors
In the fall of 2025, institutional events placed pressure on the cryptocurrency market. Approximately $1 trillion was withdrawn from cryptocurrencies over six weeks, largely due to profit-taking by investors in light of the market correction. An additional shock to the market came from a report by MSCI, an index provider, regarding plans to exclude companies with more than 50% of their assets in cryptocurrencies from their index calculations. This raised fears of new forced sell-offs of corporate "crypto-treasuries" and intensified pessimism among major investors.
Global Context: The Fed and World Markets
The decline in interest in cryptocurrencies was also influenced by a general macroeconomic slowdown. Expectations of tightened monetary policy in the U.S. (including speculation that the Fed may not lower rates in December) prompted investors to reduce risk positions. This coincided with a correction in the tech sector and a drop in stock indices—worldwide equity indices fell a few tenths of a percent at the beginning of December, reflecting a general "risk-off" trend. Such market dynamics further pressured Bitcoin and other cryptocurrencies.
Other Cryptocurrencies and Market Sentiment
A similar wave of sell-offs affected other major cryptocurrencies as well. For example, Ethereum lost over 20% of its value in November and dropped nearly 9% on December 1 alone. Analysts note that most altcoins in the top 10 decreased by an average of 5–8% during this period. The Fear and Greed Index in the cryptocurrency market fell to 24 out of 100—into the "extreme fear" zone—indicative of a panic-stricken sentiment among market participants.
Analyst Opinions and Forecasts
- Davit Damadze (ABCEX exchange) believes that Bitcoin's price will remain in the range of $80,000 to $90,000 in December.
- Alexander Kraiko (Cifra Markets) predicts a recovery to $98,000 to $102,000 in the next 1-2 months but warns that much will depend on MSCI’s decision regarding companies with significant crypto-assets.
- Yuri Brisov (Digital & Analogue Partners) notes that Bitcoin is influenced by numerous factors (Fed policy, investor interest, regulatory actions), hence any precise forecasts in the current situation are becoming increasingly meaningless.
Overall, the sentiment remains pessimistic, and even in the case of a short-term rebound in December, a new wave of declines may be anticipated at the beginning of 2026, considering the persistent macroeconomic and regulatory risks.
