Bitcoin has started December with a significant correction. On 1 December, the price fell to $85,000, a loss of around five to six percent in just a few hours. This continues the downward trend from November, a period in which over twenty percent of its value disappeared. Many investors are asking why Bitcoin is dropping so sharply today. The explanation lies mainly in a combination of market dynamics, fragile sentiment, and economic headwinds.

A decline triggered by weekend liquidations

The first blow occurred over the weekend, when crypto markets are naturally less liquid. Within a short period, hundreds of millions in long positions were liquidated, primarily due to high leverage among traders. As the price began to fall, positions were automatically closed, adding extra selling pressure. This domino effect pushed the price down further—a typical pattern when the market has too much leverage. 

Weekend trading and thin order books

On Sundays and early Monday mornings, trading volumes are usually low. There are fewer buyers and fewer orders to absorb a decline. As a result, a relatively small wave of selling can have a much larger impact than during the week. The combination of nervousness, low liquidity, and high leverage caused what would have been a normal dip to turn into a substantial correction.

The decline was already in the air

This latest drop is part of a broader market correction. Since Bitcoin reached a record high of $126,000 in early October, the market has been cooling off. November was the worst month since 2022, with more than a trillion dollars in crypto value evaporating over six weeks. Key support levels, such as $90,000, have already been broken, leaving the market more vulnerable to further shocks.

Institutional pressure and delayed ETF flows

With the introduction of spot ETFs, the market is increasingly influenced by institutional investors. In recent weeks, inflows into these ETFs have slowed or even reversed into outflows. Many large investors have built positions around $80,000 to $85,000. If the price falls below this range, risk models and internal policies can force institutional players to reduce exposure, making downward movements stronger than in previous cycles driven mainly by retail investors.

Economic headwinds beyond crypto

Sentiment in broader financial markets has also weakened. Interest rates appear to remain high for longer, tech and AI stocks are under pressure, and geopolitical tensions and trade concerns affect investor confidence. Bitcoin now moves more closely with global risk sentiment than in the past. When investors avoid risk, cryptocurrencies are almost always impacted.

Key levels to watch in the coming days

Analysts are closely monitoring the $87,000 and $82,000 ranges. The $80,000 mark is considered a critical support level, as it approximates the average purchase price for many ETFs and institutions. A clear break below this level could open the way for a decline toward $75,000 to $78,000. Conversely, a more favourable signal from the US Federal Reserve later this month could support a recovery toward $95,000 to $100,000.

Disclaimer: This is not financial advice. Always conduct your own research and consult a financial advisor before investing.