December has opened with heavy selling in bitcoin. The price slid to about $85,461, pulling it nearly 32% below its peak of $126,200 from early October.
Ethereum also took another hit, dropping 7% to around $2,800.
This fall is unusual because bitcoin often performs well at the end of the year. Over the last fourteen years, it finished December with gains almost half the time, with an average climb of 29.7%, says Alex Kuptsikevich from FxPro.
But this time, the market is moving in the opposite direction. Kuptsikevich said this wave of selling creates strong emotional pressure and that the current price pattern looks clearly bearish.
Here are the main reasons experts say bitcoin’s decline keeps getting worse:
1. Fear is getting stronger
Bitcoin has been moving in the same direction as big tech stocks in recent weeks. Traders using borrowed money are being forced to sell both stocks and crypto to cover losses, adding to the pressure.
This has created a chain reaction of more and more selling. Market mood remains very negative. CNN’s Fear and Greed Index is still in “Extreme Fear,” and CoinMarketCap’s index also shows strong bearish sentiment.
2. Concerns about the yen carry trade
The early-month drop also came after a Bank of Japan official suggested interest rates might rise soon. This raised worries about the yen carry trade, where investors borrow cheap money in Japan and invest it in U.S. markets.
When the BoJ tightens policy, global markets often react sharply. In August 2024, this caused a big sell-off.
“Japan’s situation pushed some Asian traders to step back,” said Farzam Ehsani, CEO of VALR.
3. Liquidity is weakening
Crypto markets are facing low liquidity as the year ends. A huge liquidation event in October scared traders, and November saw big withdrawals from spot bitcoin ETFs—over $3.5 billion, according to SoSoValue.
Bitcoin’s market depth fell to around $568.7 million, down from $766.4 million in early October, says Kaiko.
Ehsani noted that the order books were thin, making the market more sensitive to any shock.
4. Strategy’s possible bitcoin sale
Strategy—the biggest corporate buyer of bitcoin—hinted it may need to sell some of its holdings if its company value drops too low compared to the value of its bitcoin.
The company’s mNAV was near 1.2 last Friday. If it falls below 1, CEO Phong Le said selling bitcoin could become necessary, though it would be a “last resort.”
Strategy says it holds around 650,000 bitcoin, about 3% of the total supply.
However, recent data from Akrham Intel suggests Strategy may already have fewer coins—about 437,000, down from 484,000 earlier this month.
“Strategy is a major force in the market. Any trouble there could push bitcoin down another 30%,” Ehsani warned, saying the price could drop to around $60,000 if the bearish trend continues.