Nearly $1 billion worth of leveraged crypto positions were wiped out on Monday after another sharp fall in prices, adding fuel to an already deep market slide, a Bloomberg report said.
Bitcoin dropped up to 8% in New York, hitting $83,824. This means it has lost almost 30% of its value since early October. Ether fell even harder, slipping about 10% to $2,719, and is now down 36% in the last seven weeks.
Smaller digital coins have been hit the worst. These tokens usually attract traders because they swing more and often rise faster during good times. But this year, a MarketVector index that tracks the lower half of the top 100 cryptocurrencies has crashed almost 70%, the report said.
Why is crypto market on shaky ground?
The crypto market has not been steady for weeks now. It was first shaken by a major crash in early October when about $19 billion in leveraged bets vanished, the report said citing data from Coinglass. This slump began soon after Bitcoin hit a record high of $126,251. The sudden, automatic closing of highly borrowed positions is often called a liquidation cascade.
Traders normally study liquidation figures to understand how much borrowed money is in the system, how much risk investors are taking, and whether a big wipeout has cleared out excess speculation. But several people in the industry say exchanges don’t always share complete information, leaving traders unsure about the true level of leverage.
Sean McNulty, who leads APAC derivatives trading at FalconX, told Bloomberg that the month has started with investors pulling back. He noted that weak inflows into Bitcoin ETFs and the lack of buyers stepping in during price drops are worrying signs. He also added that structural pressures may last through December, and that Bitcoin’s next major support level is around $80,000.
Digital assets are also reacting to broader global trends. US stocks began the week under pressure, while Japan’s markets slipped and the yen strengthened after Bank of Japan Governor Kazuo Ueda signaled that a rate hike could be coming soon.
Karim Dandashy, an over-the-counter trader at Flowdesk, told Bloomberg that investors are watching global monetary policy closely as December begins. He pointed out that expectations of US Federal Reserve rate cuts have returned after briefly fading last week, and that the Bank of Japan now appears more likely to raise rates to counter recent moves in Japanese government bonds.
What’s next?
The coming week will give an important picture of how strong the US economy is, at a time when officials are deciding the path of interest rates through 2026. New data will influence expectations on whether the Federal Reserve keeps cutting rates. US President Donald Trump said on Sunday that he has chosen his nominee for the next Fed chair, and he has already signaled that he wants the new leader to push for lower interest rates.
Adding to market worries, S&P Global Ratings downgraded its view of USDT, the biggest stablecoin, to its lowest stability score last week. The agency warned that a sharp fall in Bitcoin could leave USDT without enough backing. More uncertainty came from China, where the People’s Bank of China issued a fresh caution on Saturday about the risks linked to digital currencies, including stablecoins, and urged government bodies to work together more closely to stop illegal activity.
Even so, Flowdesk trader Karim Dandashy told Bloomberg that he sees signs of improvement as the year approaches its close. He added that the real test now is whether upcoming economic data will disrupt hopes for a risk rally heading into year-end.