Bitcoin Falls 6% on December 1, Marking Largest Monthly Decline in Four Years: Analyzing Causes, China's Influence, Market Reaction, and Implications for Investors
On Monday, December 1, 2025, Bitcoin experienced one of its largest single-day drops in recent history. During trading, the price of the leading cryptocurrency fell by approximately 6%, dropping to around $84,000 before rebounding above $90,000. A massive sell-off occurred amid significant liquidation of long positions: trades worth about $1 billion were closed within 24 hours, exacerbating the market decline.
- China's Influence: The People's Bank of China confirmed the illegal status of cryptocurrencies, stating they "do not possess the same legal status as fiat" and any related operations are considered illegal financial activities.
- Long Position Liquidations: Many traders opened long positions over the weekend, and upon the opening of trading, algorithmic stop orders led to a chain liquidation of trades, further intensifying the drop.
- Risk Asset Rejection: Amid growing pessimism in global markets, investors began to exit risk assets en masse, which combined with the previously mentioned factors increased pressure on cryptocurrencies.
October Record and November Collapse
In early October 2025, Bitcoin reached an all-time high of around $126,000. However, by the end of November, the first cryptocurrency had plummeted by approximately $18,000 over the month, marking the largest monthly drop since 2021. Combined with the December crash, this means that over 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 the ban on cryptocurrencies at an official meeting, stating: "virtual currencies do not possess the same legal status as fiat and cannot be used as legal tender," and associated activities are considered 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
In the fall of 2025, institutional events put pressure on the cryptocurrency market. Over six weeks, approximately $1 trillion was withdrawn from cryptocurrencies, largely due to profit-taking by investors amid market corrections. Additionally, a shock to the market was the announcement from MSCI—an index provider—regarding plans to exclude companies with over 50% of their assets in cryptocurrencies from index calculations. This raised concerns about potential forced sell-offs of corporate "crypto treasuries" and intensified pessimism among major investors.
Global Context: Federal Reserve and Global Markets
The decline in interest in cryptocurrencies was also affected by the overall macroeconomic slowdown. Expectations of tightening monetary policy in the United States (including the assumption that the Federal Reserve may not cut rates in December) prompted investors to reduce their risk positions. This coincided with corrections in the technology sector and declines in stock indices— for instance, in early December, global stock indices fell by several tenths of a percent, reflecting the broader "risk-off" trend. Such market dynamics increased pressure on the price of Bitcoin and other cryptocurrencies.
Other Cryptocurrencies and Market Sentiment
A similar wave of sell-offs impacted other major cryptocurrencies. For example, Ethereum lost over 20% of its value in November and fell nearly 9% on December 1 alone. Analysts noted that most altcoins in the top 10 dropped by an average of 5–8% during this period. The Crypto Fear and Greed Index fell to 24 out of 100—into the "extreme fear" zone—indicating a panic sentiment among market participants.
Analyst Opinions and Forecasts
- David Damadze (ABCEX Crypto Exchange) believes that Bitcoin's price will remain in the range of $80,000 to $90,000 in December.
- Alexander Krajko (Cifra Markets) forecasts 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 many factors (Federal Reserve policy, investor interest, regulatory actions), making any precise forecasts in the current situation meaningless.
Overall sentiment remains pessimistic, and even in the event of a short-term rebound in December, another wave of decline may occur in early 2026, given the persistent macroeconomic and regulatory risks.
