Why Are Crypto Prices Dropping Today, and What’s the Outlook for December?

Crypto prices are experiencing a significant drop today, December 1, following last week’s brief recovery. Investors are responding to a range of negative news coming from the U.S. markets.

Key Takeaways

Crypto prices, including Bitcoin, are plummeting due to increased liquidations and negative market news.
Over $781 million in liquidations occurred in just 24 hours, with Bitcoin liquidations making up a significant portion.
Negative headlines, including S&P Global’s downgrade of Tether, are creating uncertainty in the market.
Possible recovery factors include anticipated interest rate cuts by the Federal Reserve and a potential bullish double-bottom pattern in Bitcoin’s price.
The Fear and Greed Index falling into extreme fear may signal a forthcoming bull run, coupled with the traditional boost from the holiday season.

crypto crashing

Understanding Today’s Market Decline

Bitcoin Bitcoin btc-7.36% and numerous alternative cryptocurrencies are witnessing a downturn as many traders who had anticipated a price rebound have been caught off guard. In the last 24 hours, total liquidations surged by 440%, exceeding $781 million. Bitcoin liquidations alone accounted for over $311 million, while Ethereum saw liquidations totaling $167 million.

The increase in liquidations significantly affects the crypto market as it triggers more selling pressure by closing existing trades. However, the current numbers pale in comparison to the liquidation frenzy on October 10, when over $20 billion worth of trades were liquidated within just one day.

The crypto market's decline is also linked to a series of negative reports. Notably, S&P Global has downgraded Tether, the most widely used stablecoin within the crypto space, citing concerns about a potential asset mismatch in the future. Arthur Hayes, founder of BitMEX, has raised alarms about Tether’s reliance on low interest rates.

"The Tether folks are in the early innings of running a massive interest rate trade. How I read this audit is they think the Fed will cut rates which crushes their interest income. In response, they are buying gold and $BTC that should in theory moon as the price of money falls." — Arthur Hayes (@CryptoHayes) November 29, 2025

Additionally, the CEO of Strategy has indicated that the company might have to sell its Bitcoin holdings if the enterprise value-to-net asset value multiple drops into negative territory. This could have substantial ramifications given that the company has been accumulating Bitcoin for the past five years.

The downturn for Bitcoin and altcoins is further exacerbated by ongoing ETF outflows. In November, spot BTC outflows reached over $3.5 billion, while Ethereum funds have recently experienced outflows for the first time in several months.

Is There Hope for a Recovery in December?

Several factors might contribute to a potential recovery for crypto prices in the near future. One key catalyst is the recent data from Polymarket, suggesting that there is nearly a 90% chance that the Federal Reserve will cut interest rates in December.

Moreover, the likelihood of Trump nominating Kevin Hassett as Fed Chair has increased over the last few days. Hassett has publicly supported the crypto industry as well as lower interest rates.

Another potential driver for recovery is the formation of a double-bottom pattern in Bitcoin's price. The daily chart indicates that Bitcoin may be establishing a double bottom at $80,494, with a neckline at $93,185, reached on November 28. Patterns like this often lead to bullish reversals.

bitcoin price BTC price chart | Source: crypto.news

Lastly, the crypto market may begin to recover as the Fear and Greed Index has dropped into the extreme fear zone, registering below 20. This can suggest that a new bull run could be on the horizon, similar to what was seen in April.

Additionally, market participants often look forward to a "Santa Claus Rally," a phenomenon where assets tend to bounce back before Christmas.