Bitcoin falls below the $90,000 mark: December trend enters a critical inflection point

By Shaw, Golden Finance

On the morning of December 1, cryptocurrencies once again experienced a “flash crash”. Bitcoin fell rapidly by more than 4,000 US dollars within 2 hours, once hitting 86,161 US dollars, falling nearly 5% in 24 hours; Ethereum rapidly fell by more than 200 US dollars within 2 hours, once hitting 2813.20 US dollars, and falling by more than 5.5% in 24 hours. According to the data, the entire network closed out 481 million US dollars in the past 4 hours, including 462 million US dollars in more orders and 19.1404 million US dollars in empty orders, which mainly exploded many orders. BTC bursts out of $159 million and ETH bursts out of $134 million.

As early as December began, the cryptocurrency market took the lead, and fears, which had abated slightly before, spread again. What happened to the market? With only one month left in this year, what is the trend in the crypto market, will it continue to be sluggish, and is the bear market getting deeper and deeper?

1. The crypto market dived for a short time, and the bulls were bloodwashed again

Earlier this morning, the crypto market experienced another “flash crash”, with Bitcoin and Ethereum all taking a big dive. Bitcoin rapidly fell by more than 4,000 US dollars within 2 hours, falling below 87,000 US dollars in a short period of time. At one point, it hit 86,161 US dollars, a drop of nearly 5% in 24 hours; Ethereum quickly fell more than 200 US dollars within 2 hours, falling below 2,900 US dollars in a short time, and once hit 2813.20 US dollars, and fell by more than 5.5% in 24 hours. Solana, BNB, etc. also experienced rapid short-term declines.

According to Coinglass data, the entire network sold out 481 million US dollars in the past 4 hours, including 462 million US dollars in more orders and 19.1404 million US dollars in short orders, which mainly exploded many orders. Among them, BTC bursted out of $159 million and ETH bursted out of $134 million. In the last 24 hours, more than 198,000 people across the network have been liquidated. The biggest single liquidation order occurred on Binance - ETH/USDC, worth $144.817 million.

The recent rise in expectations of the Federal Reserve's interest rate cut is not enough to support the continued rebound and recovery of the crypto market. Factors such as weak ETF funds, sell-off by “giant whale” investors, the re-liquidation of long leverage, and the continued tightening of domestic policies have once again deepened the panic in the market.

2. Domestic regulatory policies continue to be tightened, amplifying market fears

The People's Bank of China recently held a coordination mechanism meeting to combat speculation on virtual currency transactions. Relevant officials from 13 departments including the Ministry of Public Security and the Central Internet Information Office attended the meeting. The meeting called for continuing to adhere to the policy prohibiting virtual currencies and continuing to crack down on illegal financial activities related to virtual currencies. The conference emphasized that virtual currency does not have the same legal status as legal tender, is not legally compensable, should and cannot be used as currency in the market, and that virtual currency-related business activities are illegal financial activities. Stablecoins are a form of virtual currency. Currently, they cannot effectively meet customer identification and anti-money laundering requirements, and there is a risk that they will be used for illegal activities such as money laundering, fund-raising fraud, and illegal cross-border fund transfers. The meeting demanded that all units take risk prevention and control as an eternal theme in financial work, continue to adhere to policies prohibiting virtual currencies, and continue to crack down on illegal financial activities related to virtual currencies.

Although no new regulatory policy was introduced at this conference, it once again emphasized the strict domestic ban on virtual currency transactions and strict regulatory requirements for stablecoins.

III. Unstable macroeconomic environment affects risk asset markets

Bank of Japan Governor Kazuo Ueda said its policy committee may raise the benchmark interest rate this month. He stressed that any rate hike is only an adjustment to the degree of easing policy, and the authorities will make appropriate decisions on whether to advance policy changes. Speaking to local business leaders in Nagoya in central Japan on Monday, Kazuo Ueda said that the Japanese economy has recovered moderately, and the inflation rate is expected to briefly fall below 2% in the first half of the 2026 fiscal year, then accelerate again, and is roughly in line with the 2% target in the second half of the outlook period. He said that wages and prices are rising at the same time, and the impact of the exchange rate on prices is increasing. In order to achieve the goal of price stability, the easing policy will be adjusted in due course. If the economy and prices continue to improve, further interest rate increases will be considered.

According to overnight index swap data, traders expect the probability that the Bank of Japan will raise interest rates by the end of the next policy meeting on December 19 is about 64%. The probability of taking action by January next year is even higher to 90%. After Ueda's speech, the yen strengthened slightly against the US dollar. Prior to his speech, two-year Japanese Treasury yields had risen to their highest level since 2008 as expectations of the Bank of Japan's interest rate hike heated up.

Expectations of the Bank of Japan's interest rate hike are heating up, and uncertainty in the macroeconomic environment has affected the trend of risky asset markets such as cryptocurrencies.

4. Net ETF inflows have just recovered, and institutional entry capital is still insufficient

According to Farside Investors data, the cumulative net inflow of US Bitcoin spot ETFs was 73.2 million US dollars last week, and the cumulative net inflow of US Ethereum spot ETFs was 312 million US dollars last week. Meanwhile, BlackRock's Bitcoin spot ETF IBIT had a net outflow of US$2.34 billion in November, with a net outflow of about US$463 million on November 14 and a net outflow of about US$523 million on November 18, breaking the previous single-day outflow record twice.

Although there has been a net inflow of ETF funds, institutional entry has just resumed, and compared to previous large-scale exits of capital, the amount is still insufficient, making it difficult to support the continued rebound of the overall market.

5. Giant whale “OG” investors sell off, increasing downward pressure on the market

On-chain analyst @ai_9684xtpa监测, the 2016 ETH Ancient Giant Whale, which cost as low as $203.22, is suspected to have sold 7,000 ETH through Wintermute in the past month, with an average transfer price of $3,024. If sold, it would profit $19745,000. In addition, Aunt Ai, an on-chain analyst, observed that the address that opened a 1,074 WBTC position at an average price of 10,708 US dollars four years ago seems to have started selling ETH after selling WBTC. This year, the address made a profit of 1,000 BTC at an average price of $118,011 and made a profit of $107 million. The address has credited 5,000 ETH to Binance, worth US$15.36 million. Over the past 2 weeks, it has accumulated 13,403.28 credits to the exchange, with a total value of US$41.06 million. The address currently holds 15,000 ETH.

The giant whale “OG” address has continued to sell large amounts of crypto assets recently, putting continued downward pressure on the market, or one of the triggers for the decline.

Expectations of favorable factors in June and December may stimulate market recovery

The Federal Reserve will officially end quantitative austerity (QT) today. According to reports, the Federal Reserve decided at the interest rate meeting on October 29, 2025 to end quantitative austerity (QT) starting December 1, 2025. The Federal Reserve began tightening monetary policy in March 2022 and began reducing bond holdings in June 2022, or quantitative austerity (QT). Since 2022, the Federal Reserve has extracted more than $2 trillion from the market, and the balance sheet has now fallen to around $6.55 trillion. However, starting December 1, the situation will change, and the Federal Reserve will stop extracting funds from the market.

Furthermore, the Federal Reserve will announce its latest interest rate decision on December 10. Recent statements from major Federal Reserve officials, and “dovish” remarks about the Trump administration's popular candidate for the next Federal Reserve chairman have continued to heat up market expectations that the Fed will cut interest rates by 25 basis points in December. According to the CME “Federal Reserve Watch”, the probability that the Fed will cut interest rates by 25 basis points in December is 87.4%, and the probability of keeping interest rates unchanged is 12.6%. The probability that the Federal Reserve will cut interest rates by 25 basis points by January next year is 67.5%, and the probability of keeping interest rates unchanged is 9.2%.

Although the crypto market continues to be sluggish, favorable factors that may occur in December may stimulate a slight recovery in the market.

7. Market analysis and interpretation

At the beginning of December, cryptocurrencies were “unfavorable”, and market panic, which had just slowed down, was spreading again. With just one month left in 2025, how will cryptocurrencies evolve? Can December's favorable factors stimulate the market as planned, or will the cryptocurrency slump continue until 2026? Let's take a look at the main interpretations of the market.

1. According to CryptoQuant's latest research report, the total supply of ERC20 stablecoins has surpassed 160 billion US dollars in 2025, a record high. This is considered a key indicator for predicting the price trend of Bitcoin. Research indicates that compared with the global M2 money supply, the correlation between stablecoin supply and Bitcoin price trends is more significant. According to the report's analysis, stablecoins, as the main source of liquidity in the crypto market, can reflect investors' capital flows more quickly and directly, and their supply growth is often ahead of the rise in Bitcoin prices. During the 2021 bull market and 2024-2025 market recovery, the increase in stablecoin supply clearly preceded the rise in the price of Bitcoin. The CryptoQuant research team said that the current stablecoin supply is at an all-time high, indicating that the purchasing power at the bottom of the market continues to increase, which may become an important driving force for Bitcoin's next round of price trends.

2. According to Matrixport chart analysis, Bitcoin has just entered a rare stage: positions, market sentiment, and macroeconomic policies collide at the same time. Implied volatility has declined sharply, and demand for crash protection has subsided, yet the price remains below a key level that has historically been difficult to break through again. At the same time, an important underlying indicator of on-chain costs is being tested, and this level has often distinguished “panic” from “deep value” in the past. Adding to the tense atmosphere, expectations of interest rate cuts soared again as the Fed's tone changed, but history shows that this is exactly the stage where many traders misjudge subsequent trends. The seasonal pattern points in one direction, and the trend structure supports the other, and both are supported by data.

3. Market analyst MisterCrypto believes that market conditions already have the foundation to push Bitcoin to rebound into the $100,000-110,000 range. Bitcoin's short-term structure is showing signs of stabilization, after what he called a “capitulation sell-off” in the market. He pointed out that indicators related to trader behavior show that at a time when market sentiment falls into an extreme fear range, large players have begun to open new long positions, and this combination historically often indicates a rebound during a decline.

4. Bitwise cryptocurrency researcher André Dragosch said that Bitcoin is currently facing a macro environment “similar” to that during the COVID-19 pandemic. Based on the scale of previous monetary stimulus, global growth is expected to accelerate from then on, indicating that the growth momentum will continue until 2026. Bitcoin's current price doesn't seem to match future macroeconomic prospects, so Bitcoin may still have a lot of room to rise.

5. BitMEX co-founder Arthur Hayes insisted that Bitcoin (BTC) will rise to $250,000 by the end of the year, an increase of about 170%. Hayes believes that Bitcoin has bottomed out. It fell to the bottom of $80,600 last week, and has now rebounded by about 12%. Hayes pointed out that the US liquidity crunch cycle is nearing its end. The Federal Reserve has cut interest rates by 25 basis points in October. The market expects quantitative austerity (QT) to end as early as December, and there is an 87% chance of continuing to cut interest rates on December 10. Coupled with the reset effect brought about by the leveraged liquidation of the crypto market on October 11, it will provide Bitcoin with upward momentum. Although he acknowledged that predictions may be biased, he remains optimistic and optimistic for the long term.

6. Crypto analyst Ali wrote, “Bitcoin (BTC) usually resumes its rise after on-chain traders lose more than 37%. Currently, the indicator is 20%.”

7. The cryptocurrency sentiment analysis platform Santiment said that the price of Ethereum (ETH) may rise by nearly 7% in the short term; the basis is that stablecoin yields are currently low, which indicates that the cryptocurrency market has not yet reached an overheating state. In a report released on Saturday, Santiment stated: “Currently, stablecoin yields are low, around 4%. This phenomenon shows that the market has not yet reached the main top, and there is still room for further growth.” The platform also predicts that Ethereum may soon test the $3,200 resistance level.