Bitcoin Falls 6% on December 1, Ending Largest Monthly Drop in Four Years: Analyzing the Reasons Behind the Crash, China's Influence, Market Reaction, and Consequences for Investors.
On Monday, December 1, 2025, Bitcoin experienced one of its most significant single-day crashes in recent times. 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 substantial liquidation of long positions held by investors: about $1 billion worth of trades were closed within 24 hours, exacerbating the market downturn.
- Influence of China: The People's Bank of China confirmed the illegal status of cryptocurrencies, stating that they "do not have the same legal status as fiat currencies" and that any related operations are regarded as illegal financial activities.
- Liquidation of Long Positions: Many traders opened long positions over the weekend, and at the start of trading, algorithmic stop orders triggered a chain liquidation of trades, intensifying the decline.
- Aversion to Risky Assets: Amid rising pessimism in global markets, investors began to exit risky assets en masse, further amplifying pressure on cryptocurrencies in conjunction with the factors mentioned above.
October's Record and November's Crash
In early October 2025, Bitcoin reached its all-time high of around $126,000. However, by the end of November, the first cryptocurrency had plummeted by approximately $18,000 in a month, marking the largest monthly decline since 2021. Combined with the December crash, this signifies that Bitcoin's price has decreased by nearly 30% over a two-month period.
China and Illegal Status of Cryptocurrencies
On November 28, the People's Bank of China reiterated its ban on cryptocurrencies at an official meeting: "virtual currencies do not hold the same legal status as fiat currencies and cannot be used as a legal means of payment," adding that any activity associated with them is considered illegal financial activity. Such statements from Chinese regulators heightened investor fears and acted as one of the catalysts for the sell-off.
Institutional and Investment Factors
In the fall of 2025, institutional events exerted pressure on the cryptocurrency market. Over six weeks, around $1 trillion was withdrawn from cryptocurrencies, primarily due to profit-taking by investors amid a market correction. An additional shock to the market was MSCI's announcement—that the index provider 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 treasury" holdings, intensifying pessimism among large investors.
Global Context: The Federal Reserve and World Markets
The declining interest in cryptocurrencies was also influenced by overall macroeconomic deceleration. Expectations of tightening monetary policy in the U.S. (including speculation that the Federal Reserve may not cut rates in December) prompted investors to reduce risky positions. This coincided with a correction in the tech sector and declining stock indices; for example, in early December, global stock indices fell by several tenths of a percent, reflecting a broader "risk-off" trend. Such market dynamics heightened pressure on the price of Bitcoin and other cryptocurrencies.
Other Cryptocurrencies and Market Sentiment
A similar wave of sell-offs affected other leading cryptocurrencies. For instance, Ethereum lost over 20% of its value in November and fell by nearly 9% on December 1 alone. Analysts note that most altcoins in the top 10 experienced an average decline of 5-8% during this period. The Fear and Greed Index in the cryptocurrency market dropped to 24 points out of 100—into the "extreme fear" zone—indicating a panic sentiment among market participants.
Analyst Opinions and Forecasts
- David Damadze (ABCEX exchange) believes that in December, Bitcoin's price will remain within the range of $80,000–$90,000.
- Alexander Kraiko (Cifra Markets) predicts a recovery to $98,000–$102,000 in the next 1-2 months but warns that much will depend on MSCI's decisions regarding companies with substantial crypto assets.
- Yuri Brisov (Digital & Analogue Partners) notes that Bitcoin is influenced by numerous factors (Fed policies, investor interest, regulatory actions), making any accurate predictions in the current situation largely meaningless.
Overall sentiments remain pessimistic, and even in the case of a short-term rebound in December, a new wave of declines may be expected at the beginning of 2026, considering the ongoing macroeconomic and regulatory risks.
