Crypto sell-off pressure returned in force on Monday as bitcoin, ethereum and major altcoins slid sharply, mirroring a risk-off tone across broader markets at the start of December.
Key Points
Bitcoin was recently trading near $85,959 around 8:11 a.m. ET, down almost 6%, while ethereum dropped about 6.6% to roughly $2,827. Solana slid more than 7% to around $127, and dogecoin fell close to 9%, leaving the digital-asset market broadly in the red.
The renewed crypto sell-off followed weeks of choppy trading and came as investors contended with macroeconomic uncertainty, fresh regulatory signals out of China and concerns about heavy leverage across crypto derivatives exchanges.
Crypto Sell-Off Slams Bitcoin, Ethereum and Altcoins
The latest leg of the crypto sell-off hit the two largest tokens hardest. Bitcoin, still the bellwether for the asset class, extended an October downturn that had already rattled risk sentiment and influenced equity markets, according to market participants.
Ethereum tracked the move lower, dropping at a similar pace in early U.S. hours. The weakness spread quickly to other widely watched coins. Solana’s more than 7% decline and a roughly 9% slide in dogecoin underscored how broad Monday’s crypto sell-off was, with little sign of a safe haven within the sector.
Data from one major pricing feed showed bitcoin near $85,618 late in the morning, off roughly 6.25% on the session and hovering close to recent lows on a year-to-date chart.
Analysts pointed out that the crypto sell-off fits with a wider pullback in risk assets as December gets underway, after a volatile November that featured both sharp rallies and sudden reversals.
China Warning Weighs on Asia Crypto Stocks
In Asia, the crypto sell-off was felt not only in token prices but also in listed companies tied to digital assets.
A weekend statement from the People’s Bank of China warning about illegal activities related to digital currencies added to negative sentiment. On Monday, Hong Kong–listed shares of digital-asset-related firms retreated as investors reacted to the central bank’s comments.
The PBOC’s warning reinforced lingering concerns about regulatory scrutiny and enforcement, particularly in a region where previous crackdowns have had lasting effects on crypto trading and mining. That backdrop added another layer to Monday’s crypto sell-off, especially for investors focused on the intersection between public markets and digital assets.
Leverage Magnifies the Crypto Sell-Off
Market professionals said that leverage played a central role in the speed and scale of the latest crypto sell-off.
Ben Emons, founder and CIO of Fedwatch Advisors, told CNBC’s “Squawk Box Europe” that traders remain “nervous” after recent declines in bitcoin. He said Monday’s reversal was widely linked to a roughly $400 million exchange liquidation, illustrating how quickly leveraged positions can unwind when prices move against traders.
Emons highlighted the high levels of leverage available on some bitcoin exchanges, where ratios can reach up to 200 times initial margin. He estimated there is about $787 billion in outstanding leverage in perpetual crypto futures contracts, compared with roughly $135 billion outstanding in exchange-traded funds.
“There is still a lot of leverage in bitcoin out there,” he said, adding that the market should expect more forced liquidations if prices fail to rebound decisively from current levels.
That dynamic makes each crypto sell-off potentially self-reinforcing: as prices drop, leverage is flushed out through margin calls and liquidations, which can drive prices even lower in a short period.
Retail-Driven Trading Adds to Volatility
The structure of the market also shapes how a crypto sell-off unfolds. Emons pointed to the predominance of retail traders in bitcoin and other digital assets, saying that is “the worrying part” of recent moves.
He noted that retail investors often react differently than institutional players, particularly when faced with sharp intraday swings and headlines about large liquidations. The decentralized nature of many crypto exchanges and the opacity of certain trading venues add to the uncertainty.
According to Emons, these characteristics are “something to reckon with going forward,” especially as leverage grows and more retail accounts engage in complex derivatives products. The current crypto sell-off, in his view, is a reminder of how quickly sentiment can flip in a market where transparency is limited and risk management practices vary widely.
Macro Uncertainty and AI Valuation Fears Feed the Crypto Sell-Off
The latest crypto sell-off is also unfolding against a backdrop of broader macroeconomic concerns.
Investors remain focused on the Federal Reserve’s next interest-rate decision, with uncertainty over whether policymakers will follow through on a potential rate cut. While many market participants still expect easier policy, the outcome is not fully assured, and questions about growth, inflation and the timing of any move continue to weigh on risk assets.
At the same time, doubts about stretched valuations in artificial-intelligence–linked stocks have contributed to a bumpier environment for markets overall. November was marked by frequent swings as traders reassessed whether enthusiasm for AI had gone too far, too fast.
These cross-currents have helped shape the risk-off tone that is amplifying the current crypto sell-off. When investors pull back from high-growth equities and other speculative corners of the market, digital assets often feel the impact as well, especially when leverage is elevated.
Correlation With Equity Indexes Back in Focus
Emons noted that the sharp bitcoin decline in October moved in tandem with parts of the stock market, with the cryptocurrency showing a stronger correlation with some major indexes, including the tech-heavy Nasdaq.
That relationship appears to be reasserting itself during the latest crypto sell-off. As concerns about rate policy and valuations weigh on equities, bitcoin and other tokens have struggled to act as a diversifier, instead moving more closely with risk assets.
For investors, that means monitoring the crypto sell-off is increasingly part of tracking broader market sentiment, not just a niche or isolated story. Shifts in bitcoin can spill over into equities and vice versa, particularly when the drivers are shared macro themes like interest rates and growth expectations.
What the Latest Crypto Sell-Off Means for Investors
The renewed crypto sell-off at the start of December underscores several key themes for traders and long-term holders alike:
- Leverage remains high. With hundreds of billions of dollars in perpetual futures outstanding, even modest price moves can trigger large liquidations.
- Retail flows dominate. A market led by individual investors can react quickly and emotionally to headlines, magnifying volatility.
- Regulation still matters. Warnings from authorities such as the People’s Bank of China can reverberate across both token prices and related equities.
- Macro and tech sentiment are intertwined. Uncertainty over U.S. rate cuts and questions about AI valuations are shaping risk appetite across asset classes, including crypto.
Whether the current crypto sell-off proves to be a temporary shakeout or the start of a deeper downturn will depend in part on how bitcoin and ethereum behave around recent lows and whether incoming economic and policy signals ease investor nerves.
For now, the combination of heavy leverage, regulatory caution and broader market jitters has put digital assets on the defensive as December begins.
