Today's data
According to the latest market data and real-time reports, the cryptocurrency market has seen a significant decline today, with Bitcoin plunging from a high of about $92,000 to around $85,000, a drop of about 5-6%; Ethereum decreased by about 6-7% to around $2,800; mainstream altcoins like Solana fell by 6-8%. The total market value has evaporated by over $120 billion, with liquidations exceeding $646 million within 24 hours, mainly from long positions.
Why did the rapid decline occur?
This round of sharp decline is not driven by a single black swan event but rather by multiple macro, regulatory, and technical factors overlapping, amplifying the leverage effect.
1. Macroeconomic uncertainty and interest rate expectation adjustments
As the Federal Reserve's December rate decision approaches, the market's expectation of rate cuts has dropped from a peak of 87% to around 40%, influenced by strong employment data and stubborn inflation (CPI at 2.99%). Crypto assets, as high-risk investments, are sensitive to high interest rate environments, leading investors to seek safety, such as a 0.7% rise in gold.
Japan's bond yields surge: 10-year JGB yield reaches 1.86%, the highest in 7 years, with the 2-year breaching 1%, a first since 2008, triggering unwinding of yen arbitrage trades and capital flowing back to Japan, pressuring global risk assets.
On the day the Federal Reserve ended quantitative tightening, although it theoretically benefits liquidity, it exacerbates uncertainty in the short term, and the market did not rebound immediately.
2. Institutional capital outflow and leverage liquidation
In November, $3.55 billion flowed out of spot Bitcoin ETFs, and $1.4 billion out of Ethereum ETFs, with institutions reducing holdings, amplifying selling pressure. Whales took profits from the October bull market, further pushing down prices.
Over-leverage: Market long positions are overcrowded, funding rates have turned negative, and low liquidity order books at the opening on December 1 triggered cascading liquidations, with a single-day liquidation of $637 million. This is similar to a 'leverage reset', rather than a fundamental collapse.
3. Regulatory pressure and geopolitical events
The People's Bank of China reiterated its ban on stablecoins and cryptocurrency trading on November 30, calling them 'illegal virtual currencies' and involving money laundering risks, undermining confidence in Asian markets. Hong Kong's crypto-related stocks fell in tandem.
U.S. regulatory lag: Progress on the CLARITY Act market structure bill is hindered, compounded by the aftershocks of Trump's tariff policies, increasing global uncertainty.
4. DeFi events amplify panic
Yearn Finance's yETH liquidity pool vulnerability led to $9 million being stolen, with funds transferred to Tornado Cash, causing panic in DeFi and impacting the ETH ecosystem and altcoins. This is seen as a 'mini contagion event', limited in scale but exacerbating selling pressure.
Today's market sentiment outlook:
Sentiment indicators: The Fear & Greed index dropped to 20, extreme fear, with RSI oversold at 13.55 and MACD in negative territory. Real-time discussions on Twitter focus on risk aversion and news-driven crashes.
Short-term risk: If $BTC breaks below the $85,000 support, it may test $72,000-$74,000; $ETH focus on $2,800. The Fed's decision and inflation data on December 10 will be key turning points.
Potential rebound: Historical data shows that after such leverage cleanups, a bottom is often formed.
If interest rates are cut, BTC may retest the resistance at $94,000, targeting $101,000-$106,000.
Today's operational suggestions
Reduce leverage, DCA invest in BTC around $80,000, focus on DeFi/RWA narrative airdrops.
Invest cautiously, not financial advice. DYOR
