Bitcoin Falls 6% on December 1, Concluding Its Largest Monthly Decline in Four Years. We Analyze the Reasons Behind the Crash, China's Influence, Market Reactions, and Consequences for Investors.
On Monday, December 1, 2025, Bitcoin experienced one of its most significant one-day downturns in recent times. During trading, the price of the leading cryptocurrency dropped by approximately 6%, falling to around $84,000, before rebounding above $90,000. A mass sell-off occurred amidst substantial liquidation of long positions by investors: about $1 billion worth of trades were closed in a 24-hour period, exacerbating the market decline.
- China's Influence: The People's Bank of China reaffirmed the illegal status of cryptocurrencies, stating that they "do not hold the same legal status as fiat" and that any associated transactions are considered illegal financial activities.
- Liquidation of Long Positions: Many traders had opened long positions over the weekend, and upon market opening, algorithmic stop-loss orders triggered a chain reaction of liquidations, intensifying the decline.
- Risk Asset Abandonment: Amid growing pessimism in global markets, investors began to exit riskier assets en masse, which, combined with the aforementioned factors, amplified the pressure on cryptocurrencies.
October Record and November Crash
At the beginning of October 2025, Bitcoin reached its historical peak of approximately $126,000. However, by the end of November, the first cryptocurrency had plummeted by about $18,000 in a month, marking the largest monthly decline since 2021. Combined with the December drop, this means that in two months, Bitcoin's price has decreased by nearly 30%.
China and the Illegal Status of Cryptocurrencies
On November 28, the People's Bank of China reiterated its ban on cryptocurrencies during an official meeting, stating that "virtual currencies do not hold the same legal status as fiat and cannot be used as a legal payment method," while activities related to them are regarded as illegal financial activities. This statement from Chinese regulators heightened investor concerns and became one of the catalysts for the sell-off.
Institutional and Investment Factors
During the autumn of 2025, institutional events put pressure on the cryptocurrency market. Over approximately six weeks, around $1 trillion was withdrawn from cryptocurrencies, largely due to profit-taking by investors amid market corrections. An additional shock to the market occurred with MSCI, a provider of index products, announcing plans to exclude companies with more than 50% of their assets in cryptocurrencies from index calculations. This raised fears of forced sell-offs by corporate "crypto treasury" holders and increased pessimism among large investors.
Global Context: The Federal Reserve and Global Markets
The declining interest in cryptocurrencies was also influenced by a general macroeconomic slowdown. Expectations of tightening monetary policy in the U.S. (including speculation that the Federal Reserve might not lower rates in December) urged investors to reduce their risk exposure. This coincided with a correction in the technology sector and a decline in stock indices — for instance, at the beginning of December, global stock indices fell by a few tenths of a percent, reflecting an overall "risk-off" trend. Such market dynamics intensified pressure on the price of Bitcoin and other cryptocurrencies.
Other Cryptocurrencies and Market Sentiment
A similar wave of sell-offs affected other leading cryptocurrencies. Ethereum, for example, lost more than 20% of its value in November and fell nearly 9% on December 1 alone. Analysts note that most altcoins in the top 10 averaged a decline of 5–8% during this period. The fear and greed index in the crypto market fell to 24 points out of 100 — entering the "extreme fear" zone, indicating a panicked sentiment among market participants.
Analysts' Opinions and Forecasts
- David Damadze (ABCEX exchange) believes that Bitcoin's price will remain in the range of $80,000 to $90,000 in December.
- Alexander Krajko (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 holdings.
- Yuri Brisov (Digital & Analogue Partners) notes that Bitcoin is influenced by numerous factors (Federal Reserve policy, investor interest, regulatory actions), making any precise predictions in the current situation meaningless.
Overall sentiment remains pessimistic, and even in the case of a short-term rebound in December, a new wave of declines in early 2026 could be possible, considering ongoing macroeconomic and regulatory risks.
