Bitcoin Falls Sharply Below $86,000 as Market Risk Sentiment Deteriorates

Bitcoin tumbled on Monday, slipping more than 6% and putting the world’s largest cryptocurrency on course for its steepest daily fall since early November. The decline comes amid a broader pullback in risk assets, with investors retreating from digital currencies and equities as concerns over market concentration and global economic uncertainty intensify. Bitcoin was last down nearly 6% at $85,788, having earlier fallen as much as 8% to $83,879.

The latest slide follows a bruising month for the cryptocurrency market. Bitcoin shed more than $18,000 in November, marking its biggest monthly dollar loss since May 2021, when a wider collapse in digital assets prompted a large-scale exodus from the sector. Last month also represented the steepest monthly percentage decline since mid-2021.

Corporate and Market Pressures Intensify

Adding further pressure on Monday, business software provider Strategy (MSTR.O)—the largest corporate holder of bitcoin—trimmed its earnings outlook for 2025, citing weakness in the cryptocurrency’s recent performance. Strategy shares were down more than 3% following the announcement.

Across the digital asset space, liquidations also accelerated. According to data from CoinGlass, nearly $1 billion worth of long and short positions were liquidated in the past 24 hours, underscoring the scale of volatility gripping the market. The downturn forms part of a broader cooling of sentiment around cryptocurrencies and technology assets. Analysts note that recent optimism surrounding artificial intelligence stocks has given way to concern over overstretched valuations. Global equity markets reflected similar caution. MSCI’s gauge of worldwide stocks was last down around 0.4%, while the S&P 500 closed 0.5% lower.

‘Fading Enthusiasm’ Hits Crypto Sector

Market participants say the downturn reflects a growing sense of caution among investors.
“Bitcoin seems to be suffering from a fading enthusiasm across crypto as well as the tech world,” said Juan Perez, director of trading at Monex USA. He pointed to concerns about increased market concentration, infrastructure challenges, and weakening global trade cooperation. Ether, the second-largest cryptocurrency, also declined. It was last trading 8.8% lower at $2,756, having fallen 22% in November—its sharpest monthly drop since February’s 32% slide.

A Risk Indicator for Broader Markets?

Some strategists say bitcoin’s movements increasingly serve as a signal for overall risk appetite. While its history is relatively short, Bitcoin has tended to rise by an average of 9.7% in December, making it the third-strongest month on average. October typically ranks the highest, with average gains of 16.6%, while September is historically the weakest with a 3.5% average decline.

However, the correlation between crypto and equity markets remains inconsistent.
“Crypto and stocks may be linked via exchange-traded funds but are not always correlated,” said Joe Saluzzi, co-founder of Themis Trading. “For example, the stock market was down moderately on Monday while crypto-related assets sold off more sharply.” Kathleen Brooks, research director at XTB, said bitcoin’s slide could be “a leading indicator for overall risk sentiment,” adding that its drop at the start of the month “does not bode well” for global equities. She noted that last week’s sharp fall in volatility—reflected in the VIX dipping below its 12-month average—may have unsettled investors already wary of an uncertain year-end outlook.

Increasing Bearishness in Futures and Beyond

Bearish sentiment was also evident in the futures market. CME bitcoin futures expiring in three months traded at their smallest premium to near-term contracts in at least a year, suggesting investors are less confident in a sustained price rise. Several negative developments have weighed on the sector. Last week, S&P Global downgraded its rating of Tether, the world’s largest stablecoin, citing exposure to higher-risk assets and “persistent gaps in disclosure.” Tether said it “strongly disagrees” with the assessment. Crypto-exposed equities also declined, with Coinbase Global shares falling nearly 5%. The broader cryptocurrency market has now shed more than $1 trillion in value since reaching a record $4.3 trillion, according to CoinGecko.

Marc Chandler, chief market strategist at Bannockburn Capital Markets, said the key question is whether the crypto selloff reflects a deeper shift in investor sentiment.
“I see a lot of people trying to tie the selloff in crypto to the selloff in other asset markets,” he said. “It’s not clear yet, but we have to pay attention to it.”

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