Bitcoin has started December on a sharp downturn, falling below $88,000 in early Asian trading as the cryptocurrency extends its November slide. This drop wipes out all gains for 2025 and places BTC roughly 30% below its October record highs. Ether also fell sharply, dipping under $2,900 in a broad market selloff that highlights waning enthusiasm across the crypto ecosystem. Spot prices have since stabilized near $87,000, though trading ranges remain volatile, reflecting investor uncertainty.
The market is facing a convergence of challenges. ETF outflows have flipped what was once the main driver of bitcoin’s rally into a significant headwind. After years of sustained inflows that fueled a 600% surge in BTC, November saw withdrawals from major spot ETFs reach $3.5 billion, the largest monthly outflow since early 2025. Analysts suggest that institutional investors are pausing or reversing positions, and these redemptions add pressure by introducing steady selling into a market with diminishing new demand. Deutsche Bank research indicates this structural shift may make recovery slower than previous corrections, as institutional vehicles now amplify market stress rather than absorb it.
Liquidity in the crypto ecosystem is also weakening. Stablecoin issuance and on-chain activity have slowed, with roughly $800 million flowing out of crypto back into fiat in a single week, according to 10x Research. The total stablecoin market cap has declined by $4.6 billion since early November. Stablecoins are critical to trading and liquidity provision, and their contraction signals reduced capacity to support price rebounds. Transactional activity on Bitcoin’s network remains subdued, with mempool levels typical of bear markets, underscoring a lack of investor engagement.
Adding to the pressure, long-term holders and miners are selling into the downturn. On-chain data from Nansen and 10x Research show veteran holders are distributing coins, while early adopters are taking profits at new highs rather than adding to positions. Publicly listed miners like Riot, IREN, and MARA have seen their shares decline over 30%, reflecting margin pressures and reduced appetite for high-beta crypto plays. This combination leaves fewer patient buyers to stabilize prices, a key factor in prior recoveries.
Experts note that this downturn differs from past crashes. Retail adoption has stalled, with active crypto users dropping from 17% to 15%, challenging the narrative of ever-expanding adoption. Institutional products, such as ETFs and corporate treasuries, now play a dominant role in price formation, transmitting stress rather than absorbing it. Even with a drawdown of up to 36% from October highs, implied volatility remains relatively contained, suggesting that the market’s growing institutionalization is muting sharp swings seen in earlier cycles.
The selloff has also been fueled by a new DeFi incident. Yearn Finance’s yETH token suffered an exploit, allowing an attacker to mint unlimited yETH and extract roughly 1,000 ETH, routed through Tornado Cash. Although the absolute financial loss is small relative to bitcoin’s market cap, the incident has renewed concerns about DeFi security, triggering a swift negative reaction across crypto markets, including a 3% drop in bitcoin during early trading.
Macro factors add further complexity. The Federal Reserve’s recent rate cuts and market expectations for more easing create potential support, but broader concerns over AI-driven tech bubbles, softening labor data, and uncertainty about further policy action leave investors cautious. Bitcoin remains tied to macro risk assets, benefiting from potential liquidity injections but vulnerable to stress transmission through institutional channels.
The weakness in bitcoin has mirrored broader crypto markets, with total market capitalization falling over 30% from early October, ether down roughly 38%, and Solana over 40%. Public companies with significant crypto holdings are now underwater, reinforcing the narrative of a full-fledged bear market rather than a temporary pullback.
Looking ahead, analysts are monitoring potential turning points. A return to ETF inflows, stabilization of stablecoins, rising on-chain activity, and clear Federal Reserve guidance could provide support. Improved security and consistent regulatory frameworks may also restore investor confidence. For now, however, bitcoin enters December on the defensive, navigating a landscape defined by ETF outflows, thinning liquidity, and cautious long-term holders, even as some observers hold out hope for a late-year rebound.
