I woke up this morning, opened my phone, and nearly dropped my coffee.
Bitcoin sitting at $86,800. Ethereum under $2,900. My portfolio looked like it had been through a blender, and the entire crypto market had erased more than $200 billion overnight. No war, no hack, no exchange collapse; just pure, brutal red across every single chart.
So what the hell happened on this first day of December?
A Perfect Storm of Thin Liquidity and Over-Leveraged Greed
If you’ve been in crypto longer than one bull run, you’ve seen this movie before. The weekend finishes, Asia wakes up, liquidity is paper-thin, and someone (or a lot of someones) decides it’s time to take profits or defend a margin call. One big sell order snowballs into a cascade.
That’s exactly what went down in the early hours of Monday morning UTC. Bitcoin was quietly grinding around $91,000–$92,000 when, within roughly 20 minutes, it plunged all the way to $85,600 on some exchanges. That $4,000+ candle wasn’t driven by fundamentals. It was pure mechanical carnage.
The Leverage Monster Finally Roared
Open interest in Bitcoin perpetual futures had been sitting near all-time highs for weeks. Funding rates were insanely positive; everyone and their dog was long with 20x, 50x, sometimes 100x leverage.
When price cracked the weekend range low, stop-losses started triggering. Those stops became market sell orders, which pushed price lower, which triggered the next layer of stops. Rinse and repeat until $564 million in long positions got wiped out in less than twelve hours.
Total liquidations across all cryptos? A cool $641 million. That’s the biggest single-day liquidation event we’ve seen since the past two months.
- Bitcoin liquidations alone: $237 million
- Ethereum: $148 million
- Solana, XRP, and various memecoins made up most of the rest
- The vast majority (88%) were long liquidations
In my experience, when longs get this over-extended and liquidity dries up, the market doesn’t correct; it purges. And that’s precisely what we witnessed.
Weekend Liquidity Is Still a Thing in 2025
A lot of new traders genuinely believe crypto trades 24/7 with the same depth at 3 AM UTC on a Monday as it does at 8 PM when New York and London overlap. It doesn’t.
Market makers pull bids on weekends. Big players hedge less aggressively. A $30–50 million sell wall that would barely register on a weekday becomes a wrecking ball when almost no one is there to absorb it. The result? Flash crashes that look insane on the chart but are completely predictable if you watch order-book heatmaps.
“Crypto never sleeps, but the serious money definitely takes weekends off.”
– Veteran macro trader
Federal Reserve Jitters Refuse to Die
Look, everyone knows the script by now: Fed cuts rates → risk-on → crypto moons. Fed pauses or sounds hawkish → risk-off → crypto bleeds.
Jerome Powell’s latest comments basically amounted to “we’re data-dependent and in no rush.” Translation for markets: another December cut is far from guaranteed. The probability on CME FedWatch dropped from ~72% to ~58% last week, and that shift alone was enough to make macro funds lighten up on risk assets.
Add in the fact that quantitative tightening technically ends today (Dec 1), yet the balance-sheet runoff pace isn’t changing much, and you get a liquidity picture that isn’t nearly as rosy as bulls were hoping.
The Fear & Greed Index closed November at 68 (Greed) and opened December at 41 (Fear). That kind of swing doesn’t happen without real money heading for the exits.
Spot ETF Demand Has Completely Dried Up
Remember when spot Bitcoin ETFs were pulling in $1–2 billion a week and everyone said “institutions are here forever”? Yeah… November flipped that narrative on its head.
Net flows for U.S. spot Bitcoin ETFs in November: -$3.5 billion.
Spot Ethereum ETFs: -$1.42 billion.
Those aren’t small numbers. That’s institutions quietly pressing the sell button (or at least stopping the buy button) right when retail was expecting another leg higher into year-end. When the “smart money” stops accumulating, price usually follows.
Memecoins Got Absolutely Destroyed (As They Should)
While majors are down 5–8%, the real pain is in the meme sector:
| Asset | 24h Change | |
| PEPE | -9.6% | |
| BONK | -9.5% | |
| WIF | -9.8% | |
| POPCAT | -12.8% | |
| FLOKI | -11.2% |
These coins run on pure leverage and sentiment. When both reverse at the same time, they fall off a cliff. Honestly? Good. The sector was trading at absurd valuations with zero fundamental backing. A healthy flush was overdue.
So… Is This The Top? Or Just a Healthy Pullback?
Here’s my honest take after watching these cycles since 2017:
This feels much more like a mid-cycle deleveraging shakeout than the actual bull-market top.
Why? Because tops are usually euphoric, quiet, and accompanied by extreme retail FOMO. We’re not there. The average person on the street still isn’t asking me about Bitcoin at holiday parties. That’s usually the real sign.
What we are seeing is classic over-leverage being washed out, thin weekend liquidity exaggerating moves, and macro uncertainty giving institutions an excuse to take profits before year-end tax harvesting.
In other words, painful but ultimately healthy.
What Happens Next?
- If Bitcoin holds the $84,000–$85,000 zone (previous all-time high area), we probably base here and grind higher into Christmas.
- If we lose that level decisively, $74k–$78k is next major support, and things could get ugly fast.
- Watch ETF flows this week. Any return to positive territory would be massively bullish.
- Watch funding rates. Once they reset negative or neutral, the setup for another leg up improves dramatically.
Bottom line: today sucked. But crypto has a habit of humiliating both the perma-bears and the over-leveraged bulls in the same week.
Zoom out. We’re still up 120%+ on Bitcoin this year, Ethereum 80%+, and many alts 10x or more. A 6–10% correction after that kind of run isn’t a tragedy; it’s gravity.
Stay calm, manage your leverage (or better yet, don’t use stupid leverage), and remember: the market will still be here tomorrow.
See you on the other side.
