Crypto Winter Begins With Sharp Market Sell-Off
The cryptocurrency market suffered a painful blow at the start of December, kicking off the winter season and the new month with a 5% drop in just 24 hours, pulling total market capitalization back below $3 trillion. This move appears to be part of a bearish strategy to apply maximum emotional pressure, as the beginning of a month often sets the tone for the weeks ahead. The sell-off occurred during a period of low liquidity, intensifying the downward swing. However, before European markets opened, signs of stabilization and a potential rebound began to emerge.
Bitcoin fell to $85,500 on strategy day but rebounded to $86,700 at the time of writing.
Technically, a bearish setup is forming. After four days of consolidation near the 61.8% Fibonacci retracement level, Bitcoin dropped sharply.
A quick rebound has not materialized. A signal for a deeper decline toward $64,000 (161.8% Fibonacci) will only be confirmed if Bitcoin falls below $80,500.
Bitcoin declined 17.5% in November, closing at $91,300—its first monthly drop in three years, defying the usual seasonal strength of November.
Historically, December has been a relatively strong month for Bitcoin, with an average gain of 8.7%. Over the past 14 years, Bitcoin has posted gains in December seven times, with an average increase of 29.7% and an average decline of 12.3%.
Investment inflows into newly launched Solana ETFs in the United States have continued for five consecutive weeks. Over $108 million was added in just one week, bringing the total to nearly $620 million since their launch on October 28.
Spot XRP ETFs, launched on November 14 in the United States, have attracted over $666 million in inflows.
CryptoQuant highlights several key on-chain metrics that suggest conditions are ripe for Bitcoin’s recovery. One of the most notable signals is a reduction in leverage.
According to Bitcoin Vector, Bitcoin remains in a “high-risk zone,” but selling pressure is easing and spot demand is “finally beginning to shift the balance of power.”
For Bitcoin to continue its upward trajectory, it must overcome “clusters of large buyer supply” in the $93,000–96,000 and $100,000–108,000 ranges (Glassnode analysis).
Bitwise notes that the last time such an “asymmetrical risk/reward ratio” was observed was during the COVID-19 pandemic, when Bitcoin fell below $4,000.