Bitcoin plunged below $87,000 after briefly attempting to reclaim $90,000, pulling the wider market into deep losses and erasing nearly all gains from the previous week.
The steep decline did not come gradually. Selling pressure began building during Asian trading hours and escalated into a full-scale liquidation event as the day progressed. Ethereum, Solana, BNB, XRP, Cardano, Dogecoin and almost every major altcoin followed Bitcoin sharply lower, many posting declines between 6% and 9% in 24 hours.
China's Renewed Warning Delivers the First Blow
Sentiment took a direct hit after a fresh statement from the People's Bank of China circulated through regional financial media. Although China has banned crypto trading since 2021, its central bank insisted that enforcement must now intensify, with stablecoins specifically flagged as a renewed threat. Officials argued that "virtual currency speculation has resurfaced" and pointed to rising retail participation as a risk to financial stability.
Investors saw little new policy information in the statement, but the timing of the warning - delivered during a vulnerable and highly leveraged market phase - magnified its impact. Stablecoins are the backbone of crypto liquidity, and any hint of pressure on the sector can create outsized reactions across centralized and decentralized markets.
A Violent Liquidation Cascade Follows
Once Bitcoin slipped under $90,000, derivatives markets unraveled quickly. A flood of long positions began to unwind, and the forced selling that followed triggered further declines. In the space of 24 hours, more than six hundred million dollars in leveraged trades were liquidated globally, with the majority of the wipeouts concentrated in Bitcoin and Ethereum.
Analysts have been cautioning for weeks that excessive leverage was once again dominating the market, and Monday's crash provided the proof. Nearly ninety percent of liquidated positions came from bullish bets, suggesting that traders overestimated the strength of November's attempted rebound.
Technical Indicators Don't Yet Show Stability
Chart signals offer little reassurance for the short term. Bitcoin's daily candles reveal a clear rejection of the $92,000 recovery zone and a pattern of lower highs that has now formed repeatedly since late October. The RSI sits near oversold territory but has not confirmed exhaustion, while the MACD continues to drift downward - a sign that momentum remains in favor of sellers.
Market strategists warn that even if a temporary bounce appears, price volatility is likely to remain elevated until leveraged positions reset and spot market buying regains dominance.
Seasonality Adds Another Psychological Blow
The timing of the crash adds yet another layer of pressure. November closed with a heavy loss of more than 17 percent, marking the worst November for Bitcoin since 2018. Coinglass seasonality data shows an uncomfortable pattern in which every previous red November - including 2018, 2019 and 2022 - was followed by a red December.
Investors are well aware of this trend, and many fear a repetition of past cycles where early December volatility kicked off a month-long grind downward. Bitcoin's dramatic opening to December only reinforces the anxiety.
"Not a Fundamental Collapse," Says Market Research
Not all observers see the crash as a sign of structural weakness. Some analysts argue that the downturn is a mechanical reset driven by extreme leverage rather than a shift in long-term fundamentals. Macro strategist Adam Kobeissi attributed the flash crash to a sudden wave of selling volume that triggered domino-style margin calls across the market. In his view, the decline reflects positioning rather than sentiment or real capital exit.
Crypto's liquidity issue:
As seen countless times this year, Friday night and Sunday night often come with LARGE crypto moves.
Just now, we saw Bitcoin fall -$4,000 in a matter of minutes without ANY news at all.
Why? Liquidity is thin.
Then, add this to the fact that… https://t.co/BTRNPV8Y5a
- The Kobeissi Letter (@KobeissiLetter) December 1, 2025
Research desks monitoring institutional flows point out that there has been no meaningful deterioration in ETF demand, custody development or long-term adoption drivers. However, they also warn that the market will continue to punish over-leveraged traders until spot demand re-asserts dominance.
Analysts now expect a period of elevated volatility rather than a direct continuation of the crash. The $82,000–$84,000 range is seen as the first major support where buyers may attempt to regain control, while resistance at $90,000 remains the key threshold that would have to be reclaimed to restore bullish momentum. If selling pressure intensifies and Bitcoin breaks below $82,000, traders warn that another liquidation wave could follow. On the other hand, if ETF inflows and spot demand rebound later in the month, a relief rally could emerge quickly from oversold conditions.
Where the Market Stands Now
The crypto market has now entered a high-volatility zone in which even minor headlines or liquidity fluctuations could trigger further swings. Traders are watching the $82,000 to $84,000 range as a critical short-term support area for Bitcoin. Losing that zone could invite another wave of forced selling, while holding it could set the stage for an early relief rally.
Either way, confidence has taken a hit. With China tightening rhetoric, liquidation pressures still looming and historical seasonality working against market sentiment, the opening days of December are shaping up to be decisive for the direction of the rest of the month.