Bitcoin fell 6% on December 1st, completing its largest monthly decline in four years. We analyze the reasons for the crash, the influence of China, market reactions, and the consequences for investors.
On Monday, December 1, 2025, Bitcoin experienced one of its largest single-day collapses 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. The mass sell-off occurred amid significant liquidation of long positions by investors: approximately $1 billion worth of trades were closed in 24 hours, exacerbating the market's downturn.
- Influence of China: The People's Bank of China confirmed the illegal status of cryptocurrencies, stating that they "do not hold the same legal status as fiat" and any dealings related to them are considered illegal financial activities.
- Liquidation of Long Positions: Many traders had opened long positions over the weekend, and when trading commenced, algorithmic stop orders triggered a chain liquidation of trades, intensifying the decline.
- Exit from Risky Assets: Amid rising pessimism in global markets, investors began to flee from risky assets, further amplifying the pressure on cryptocurrencies in conjunction with the factors mentioned above.
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 plummeted by around $18,000 within the month, marking its largest monthly decline since 2021. Combined with the December crash, this signifies that Bitcoin’s price has decreased by almost 30% over the two-month period.
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, “virtual currencies do not possess the same legal status as fiat and cannot be used as legal tender,” and that any related activities are regarded as illegal financial activity. Such statements from Chinese regulators heightened investor concerns and acted as a catalyst for the sell-off.
Institutional and Investment Factors
In the autumn of 2025, a substantial pressure on the cryptocurrency market stemmed from institutional events. Over a six-week period, approximately $1 trillion was withdrawn from cryptocurrencies, largely due to profit-taking by investors amid market corrections. An additional shock to the market came from MSCI—an index product provider—announcing plans to exclude companies where more than 50% of assets are tied to cryptocurrencies from their indices. This raised concerns about potential forced sell-offs of corporate crypto holdings and intensified pessimism among large investors.
Global Environment: The Fed and World Markets
The decline in interest in cryptocurrencies was also influenced by a general macroeconomic slowdown. Expectations of tightening monetary policy in the US (including the suggestion that the Fed may not cut rates in December) led investors to reduce risky positions. This coincided with a correction in the technology sector and a decline in stock indices—in early December, global stock indices fell by several tenths of a percent, reflecting an overall 'risk-off' sentiment. Such market dynamics intensified pressure on Bitcoin and other cryptocurrencies.
Other Cryptocurrencies and Market Sentiments
Similar waves of sell-offs affected other leading cryptocurrencies. Ethereum, for example, lost over 20% in value in November and fell nearly 9% on December 1 alone. Analysts note that most altcoins in the top 10 saw an average decline of 5–8% during this period. The Fear and Greed Index for the crypto market dropped to 24 out of 100—into the 'extreme fear' zone—reflecting a panicked sentiment among market participants.
Analysts' Opinions and Predictions
- Davit Damadze (ABCEX exchange) believes that Bitcoin's price will remain in the range of $80–90,000 in December.
- Alexander Krayko (Cifra Markets) predicts a recovery to $98–102,000 in the next 1–2 months, but warns that much will depend on MSCI's decisions regarding companies with significant crypto assets.
- Yuri Brisov (Digital & Analogue Partners) notes that Bitcoin is influenced by numerous factors (Fed policy, investor interest, regulatory actions), making any precise forecasts meaningless in the current situation.
Overall, sentiment remains pessimistic, and even in the event of a short-term rebound in December, another wave of decline in early 2026 may be possible, considering the ongoing macroeconomic and regulatory risks.
