Bitcoin Falls 6% on December 1, Marking the Largest Monthly Decline in Four Years. Examining the Reasons for the Plunge, China's Influence, Market Reactions, and Implications for Investors.
On Monday, December 1, 2025, Bitcoin experienced one of its most significant one-day declines in recent times. During trading, the price of the original cryptocurrency dropped by approximately 6%, reaching a low of around $84,000, before bouncing back above $90,000. The mass sell-off occurred amid substantial liquidation of long positions held by investors: approximately $1 billion in trades were closed within 24 hours, exacerbating the market downturn.
- Impact of China: The People's Bank of China reaffirmed the illegal status of cryptocurrencies, stating that they "do not possess the same legal status as fiat currencies" and any transactions associated with them are considered illegal financial activities.
- Long Position Liquidation: Many traders opened long positions over the weekend, and at the market's opening, algorithmic stop-orders triggered a chain liquidation of trades, intensifying the decline.
- Flight from Risky Assets: Amid growing pessimism in global markets, investors began fleeing from risky assets en masse, which, combined with the aforementioned factors, increased pressure on cryptocurrencies.
October Record and November Decline
At the beginning of October 2025, Bitcoin reached its all-time high of around $126,000. However, by the end of November, the leading cryptocurrency had plummeted by approximately $18,000 over the month, marking the largest monthly decline since 2021. Coupled with the December drop, this signifies that Bitcoin's price has decreased by nearly 30% over two months.
China and the Illegal Status of Cryptocurrencies
On November 28, the People's Bank of China reiterated its ban on cryptocurrencies during an official meeting: "virtual currencies do not hold the same legal status as fiat currencies and cannot be used as legal tender," and associated activities are deemed illegal financial operations. This announcement from Chinese regulators heightened investor concerns and acted as a catalyst for the sell-off.
Institutional and Investment Factors
In autumn 2025, institutional events applied pressure to the cryptocurrency market. Over a period of six weeks, around $1 trillion was withdrawn from cryptocurrencies, largely due to profit-taking by investors amid market correction. An additional shock to the market came from MSCI — the index product provider — announcing plans to exclude companies with over 50% of their assets in cryptocurrencies from their indices. This raised concerns about potential forced sell-offs of corporate "crypto funds" and intensified pessimism among major investors.
Global Context: The Federal Reserve and World Markets
The decreasing interest in cryptocurrencies was also influenced by the overall macroeconomic slowdown. Expectations of tightened monetary policy in the US (including the notion that the Federal Reserve may not lower interest rates in December) led investors to reduce risky positions. This coincided with a correction in the technology sector and a decline in stock indices — for instance, at the beginning of December, global stock indices dipped by several tenths of a percent, reflecting an overall "risk-off" trend. Such market dynamics have compounded the pressure on Bitcoin and other cryptocurrencies.
Other Cryptocurrencies and Market Sentiment
A similar wave of sell-offs affected other leading cryptocurrencies. Ethereum, for example, lost over 20% of its value in November and dropped nearly 9% on December 1 alone. Analysts note that most altcoins within the top 10 fell by an average of 5-8% during this period. The Fear and Greed Index in the crypto market plunged to 24 out of 100 — entering the "extreme fear" zone, indicating a panic-driven sentiment among market participants.
Analyst Opinions and Forecasts
- David Damadze (ABCEX exchange) believes that Bitcoin's price will remain within the $80,000–90,000 range in December.
- Alexander Kraiko (Cifra Markets) predicts a recovery to $98,000–102,000 within the next 1-2 months but warns that much will depend on MSCI's decision regarding companies with significant crypto assets.
- Yuri Brisov (Digital & Analogue Partners) states that Bitcoin is influenced by numerous factors (the Federal Reserve's policy, investor interest, regulatory actions), making any precise forecasts seem meaningless in the current climate.
Overall, sentiments remain pessimistic, and even in the event of a short-term rebound in December, another wave of decline is likely at the beginning of 2026, considering the persistent macroeconomic and regulatory risks.
