The last month of the year kicks off with more bitcoin sales.
December opened with bitcoin falling deeper into its bear market, with the token’s price trading as low as $85,461 on Monday. This puts bitcoin down about 32% from its all-time high in early October, when the crypto hit a high of around $126,200.
Ethereum also plunged again, down 7% to trade around $2,800.
This is an unusual trend for bitcoin, which tends to see a rally in the final months of the year. Over the past 14 years, bitcoin has finished December in the green about half the time, with an average increase of 29.7%, according to Alex Kuptsikevich, chief market analyst at FxPro.
“This appears to be part of the Bears’ plan to create the most emotional pressure, as the start of the month is seen as an emotional precursor for the weeks to come,” Kuptsikevich wrote in a note Monday. “Technically, a bearish picture is emerging,” he added of Bitcoin’s recent moves.
Here are the reasons why crypto analysts believe that Bitcoin’s decline simply won’t stop:
1. Risk aversion is increasing
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Bitcoin and the market’s best-performing tech stocks have moved in tandem over the past few weeks. Bitcoin has been a source of selling pressure for stocks, with leveraged investors selling stocks and cryptocurrencies to meet margin requirements as the selloff drags on.
Risk aversion has triggered a feedback loop of continued selling, sources said, and there is no indication yet that sentiment is about to turn more bullish.
CNN’s Fear and Greed is still in “extreme fear” territory. Coin Market Cap’s Crypto Fear and Greed Index is also at bearish levels.
Tech stocks struggled again Monday after capping a relatively strong, holiday-shortened week. Broadcom fell nearly 4%, while Nvidia was mostly flat after recouping its premarket losses.
The Fed’s uncertain outlook is also weighing on risk appetite. Although the chances of a December rate cut have increased, opinions are divided on how far the central bank could cut rates in 2026.
2. Concerns about the yen carry trade
The pressure on cryptocurrencies and other risk assets earlier this month was also partly fueled by comments from a Bank of Japan official on Monday, who suggested the central bank could soon raise interest rates. That has reignited concerns about the end of the yen carry trade, a phenomenon whereby investors borrow cash at near-zero interest rates in Japan and deploy it in U.S. markets.
Previous monetary tightening by the BoJ has triggered significant volatility in global markets, with August 2024 seeing a particularly difficult selling period.
“Macroeconomic uncertainty in Japan has triggered mild risk aversion, particularly among some Asian market participants,” Farzam Ehsani, CEO of cryptocurrency exchange VALR, wrote in a statement.
3. Low liquidity
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Liquidity has dried up in crypto markets over the latter part of the year. After a colossal sell-off in October, investors remain jittery, market experts say, and ETF outflows have been significant. Investors withdrew $3.5 billion from Bitcoin spot funds in November, according to SoSoValue data.
Bitcoin market depth, a measure of its price resistance volatility from large transactions, was hovering around $568.7 million at the end of last week, down from a high of $766.4 million in early October, according to the crypto analytics firm. Kaiko.
“Pressure on the markets intensified because the order book was shallow and the market lacked sufficient depth to withstand another macroeconomic liquidity shock,” Ehsani added.
4. Strategic nervousness
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Strategy, the OG Bitcoin treasury company and the largest buyer of Bitcoin, has hinted at the possibility of selling cryptocurrencies if the company’s valuation falls below a key level relative to the value of its Bitcoin stack.
The company’s mNAV, which measures the value of the strategy relative to the value of its bitcoin holdings, was hovering around 1.2 on Friday, according to the most recent data posted on the strategy’s website. If this indicator drops below 1, it could be a trigger for the Treasury to start shedding some of its Bitcoin stores, Phong Le, CEO of Strategy, said on Friday.
“I hope our mNav doesn’t go below one. But if we did and we had no other access to capital, we would sell bitcoin. But that would almost be a last resort,” Le said, speaking on the “What Bitcoin Did” podcast.
Strategy, which has been aggressively buying bitcoin for years, says on its website that it holds about 650,000 bitcoins, or about 3% of the total supply.
Rumors that Strategy has sold or may soon sell some of its bitcoin holdings have gained traction in recent weeks. Last month, Akrham Intel, a crypto intelligence company, estimated This strategy had around 437,000 Bitcoin tokens as of Friday, down from a high of around 484,000 tokens earlier this month. Previously, the company said he believed he had identified approximately 97% of Strategy’s total bitcoin holdings.
“The strategy is a key player in the crypto market, and potential issues could cause the Bitcoin price to fall by an additional 30%,” Ehsani said, estimating that the coin could trade as high as $60,000 if its bear market continues.
