The cryptocurrency market faced another sharp sell-off on Monday, with Bitcoin briefly falling below $86,000, marking a nearly 6% single-day decline. Over $600 million in leveraged positions across the market were liquidated, dragging the total crypto market capitalization back to the $3 trillion level. Ethereum dropped more than 6%, while other major tokens like Solana, Dogecoin, and XRP also weakened.

Bitcoin had already shown weakness in November, declining 17.5% for the month—its steepest drop since March. As December began, multiple headwinds intensified: tightening regulatory signals and a security breach on the decentralized finance platform Yearn Finance, where attackers exploited a vulnerability to siphon off around $3 million worth of Ethereum. This reignited concerns over on-chain security risks.

Institutional interest also cooled significantly. U.S. spot Bitcoin ETFs recorded approximately $3.5 billion in net outflows in November, nearing a historical high. Sean McNulty, Head of Asia-Pacific Derivatives at FalconX, noted, "Weak ETF inflows, coupled with a lack of dip-buying capital, are the primary sources of pressure on the market."

Investors are now awaiting signals from the Federal Reserve's December 9–10 policy meeting. Interest rate futures indicate bets are heavily concentrated on a single 25-basis-point rate cut, though uncertainty around inflation and the 2026 policy path has tightened overall risk appetite, triggering a correlated pullback in crypto assets.

McNulty highlighted that the next critical support level lies near $80,000. As prices slid further, a cascade of liquidations was triggered, wiping out over $540 million in long positions alone and catching traders betting on a rebound off guard.