In a significant shift in the cryptocurrency market, Bitcoin fell below $86,000 during Asian trading on Monday. This decline comes amidst a generally steadier atmosphere for regional stocks, which are benefiting from rising optimism surrounding a potential interest rate cut from the U.S. Federal Reserve. After nearing $91,000 at the end of November, Bitcoin’s gradual descent has now accelerated, with a notable wave of selling reducing its value to approximately $86,053, reflecting a 5.4% decrease.
The broader market overview signals downturns across various cryptocurrencies, with Ether priced at $2,819 (down 6.1%) and XRP at $2.04 (down 7.5%). The total crypto market capitalization has contracted to $3.01 trillion, marking a 4.9% decline.
This downturn in cryptocurrencies correlates with developments in traditional financial markets, such as the Japanese bond market, where renewed expectations of rate hikes have driven the 2-Year Japanese Government Bond yield above 1% for the first time since 2008. Following this news, the Nikkei index experienced a drop of about 1.3%, while the Hang Seng index in Hong Kong slightly rose by over 1%.
Recent data from Coinglass highlights a significant wave of liquidations in leveraged crypto positions, revealing that over $600 million in crypto bets were wiped out in the past 24 hours. Long positions were particularly affected, with more than $535 million lost, while short positions accounted for only about $73 million in liquidations. Bitcoin and Ethereum led the way in these forced liquidations, with approximately $185 million and $154 million, respectively, being cleared out.
The equity markets appear more stable, with the MSCI’s broad index of Asia Pacific shares (excluding Japan) remaining relatively unchanged, yet still up 23.5% year-to-date, positioning it for its strongest annual performance since 2017. The challenges faced by the Chinese property sector continue to loom large, particularly following reports that China Vanke struggled to secure a short-term bank loan, intensifying concerns about credit conditions.
In the United States, investors are closely watching upcoming data releases this week, which will include key indicators on manufacturing, services, consumer confidence, and insights related to holiday spending from Black Friday and Cyber Monday. The Federal Reserve’s forthcoming policy meeting in mid-December adds further intrigue, as traders anticipate remarks from Chair Jerome Powell that could provide clues about future interest rate cuts. Recent commentary from regional Fed officials has fostered a prevailing sentiment that subsequent rate cuts are probable, with futures markets currently pricing in an 87% chance of a cut this month.
Amid this backdrop, the upcoming economic data is set to heavily influence discussions about potentially extending the rate-cutting cycle into 2026, especially as inflation rates decrease and consumer demand begins to wane. For cryptocurrency traders, this week’s developments are crucial in determining whether Monday’s Bitcoin decline marks simply a temporary reshuffling of positions or the onset of a more profound correction following a bullish year-long rally.
