Crypto Market Slumps as December Begins — What’s Driving the Drop?

The crypto market opened in December on a shaky note, with major assets sliding sharply in early trading. Bitcoin (BTC) plunged as much as 4.3% to below US $88,000, while Ethereum (ETH) dropped around 6% to under US $2,900.

What triggered the sell‑off?

• A blow to sentiment came after a security incident at the decentralised-finance platform Yearn Finance: its yETH liquidity pool was reportedly exploited, prompting fear and panic in the market, dragging down not only ETH but broader crypto sentiment.
• Macro pressure also played a part: rising bond yields in Japan — which increased expectations of monetary tightening — helped fuel risk-off across global assets, including crypto.
• The plunge follows a rough November for crypto: continued outflows from institutional funds, waning demand, and a broader decline in risk appetite among investors were already weighing on prices.

Bigger context: Why this feels more than just a dip

Bitcoin has lost a substantial portion of its gains from earlier this year — the slide from its peak above US $120,000 has erased much of 2025’s momentum.

Liquidity concerns are also rising: weak inflows into crypto ETFs and fewer large-scale buyers overall suggest that many investors are either sitting on the sidelines or exiting entirely.

Additionally, the vulnerability shown by crypto platforms — like the incident at Yearn — reminds the market that technical and security risks remain high, which seems to be reinforcing the current risk-off mood.

What could be ahead — and what to watch

• Some traders now have their eyes on the US$80,000 mark for Bitcoin — a psychological level that may act as support if selling pressure continues.
• Broader macro developments — especially interest rates, bond yields, and global risk sentiment — may continue to heavily influence crypto prices in the near term.
• For Ethereum and other altcoins, security events, issues within decentralised finance, and liquidity outflows could lead to further setbacks.

 Final thoughts

The sudden downturn feels like more than just a routine market wobble — it reflects broader uncertainty across both macroeconomic and crypto-native fronts. For now, many investors are pulling back; liquidity is thinning; and risk sentiment is fragile. That said, if broader macro conditions stabilise — and confidence in crypto infrastructure returns — this dip could also offer a lower-risk entry point for long-term investors willing to ride out volatility.

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