December is a month that many look forward to as the holiday festivities kick into full gear and extended rest and relaxation activities with our loved ones approach. But for cryptocurrency investors, the month is anything but a good start.
At the time of writing, cryptocurrency prices were down across the board on the first trading day of December. This encompasses significant price drops of major cryptocurrencies including Bitcoin, Ethereum, XRP and Solana. Here’s what you need to know.
Cryptocurrencies start December with sharp declines
Almost all major cryptocurrencies see significant declines on the first trading day of December. As of this writing, most major coins are down over the past 24 hours, including:
- Bitcoin: down 5%
- Ethereum: down 5.5%
- XRP: down 6.8%
- BNB: down 5.9%
- Solana: down 6.8%
Additionally, meme coins also declined, with Dogecoin down 8%.
Unfortunately, these declines are not outliers for cryptocurrencies as of late. Over the past month, major cryptocurrencies have been hit hard as investors sold the digital tokens amid declining risk appetite.
Over the past 30 days, Bitcoin has fallen 21%, from around $111,000 per token to the current price of just over $86,600.
During the same period, Ethereum fell more than 26%, XRP more than 18%, BNB more than 24%, and Solana more than 31%. Dogecoin is down more than 26% over the past month.
Why are Bitcoin and other cryptocurrencies falling today?
There isn’t a single event weighing on Bitcoin and other cryptocurrencies today, just like there hasn’t been a single event weighing on the digital token markets over the past month.
Instead, the decline in cryptocurrencies across the board on the first trading day of December is likely driven by several factors.
Perhaps the biggest factor behind the Dec. 1 crypto decline is continued uncertainty over whether the Federal Reserve will vote to cut interest rates when the central bank meets to vote on the issue on Dec. 9-10.
A drop in interest rates is generally considered a good thing for cryptocurrencies, because rate cuts increase liquidity in the markets, which generally incentivizes investors to take more risks.
As cryptocurrencies are among the most volatile assets, increased risk-taking can spur investment in the coins, driving up their prices. However, if the Fed does not reduce rates, this increase in liquidity will not materialize, which could impact investments in risky assets.
Barchart reports that markets believe there is an 83% chance that the Federal Reserve’s monetary policy group, the Federal Open Market Committee (FOMC), will cut interest rates by 25 basis points.
However, rate cuts aren’t the only reason Bitcoin and other cryptos are starting December off on the wrong foot.
As Fast business As previously noted, in November, investors increasingly shifted their focus to artificial intelligence stocks, including AI heavyweights like Nvidia Corporation (Nasdaq: NVDA) and major OpenAI investor Microsoft Corporation (Nasdaq: MSFT).
Over the past month, NVDA shares are down nearly 12% and MSFT shares are down more than 9%.
Stock prices of AI and adjacent companies have been highly volatile this year amid growing fears of an AI bubble. Many investors who invest in these companies have a high risk appetite, which is why many AI investors are also cryptocurrency investors.
And when one high-risk asset falls, investors tend to sell their other high-risk assets to lock in their gains and avoid further losses. Persistent fears of an AI bubble could therefore influence the decline in cryptocurrency prices.
Besides these two lingering factors that have been weighing on crypto markets for some time now, a few more recent events could be contributing to crypto losses on the first trading day of December.
According to a CNBC report, the People’s Bank of China issued a warning on Saturday regarding illegal activities involving digital tokens. This warning caused shares of companies in the digital asset sector to fall on the Hong Kong market.
In addition, CoinDesk reports that on Monday morning, notable forced liquidations took place in crypto markets as traders failed to meet margin requirements for leveraged positions, putting pressure on cryptocurrency prices.
2025 turns negative for crypto
At the start of the year, many investors and industry observers expressed optimism that Bitcoin and other cryptocurrencies were going to have a tremendous year of growth in 2025, thanks in large part to the new Trump administration and its cryptocurrency-friendly policies.
But while tokens like Bitcoin hit an all-time high of over $126,000 this year, the crypto king has fallen well below its 2025 starting price.
As of this writing, Bitcoin has lost approximately 7.24% of its opening 2025 value. Ethereum has lost 14.6% of its value and Solana 32%.
BNB is a rare bright spot for major cryptocurrencies this year. The coin has seen growth of almost 18% so far this year.
Of course, given the volatile nature of cryptocurrencies, it’s always possible that things could reverse quickly. There is still one month left in the year, and if there is a late surge in tokens, Bitcoin and other cryptocurrencies could still turn green for the year.
Whether or not that happens likely depends largely on the Fed’s rate cut decision next week and, of course, the greed and fear investors feel heading into the new year.
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