In One Night: 2 Trillion RMB Vanished, the Bull-Bear Turning Point Behind Bitcoin's Crash

The early hours of December will never be gentle to any trader. On the morning of December 1st, the entire crypto market experienced a sudden and unforeseen crash — Bitcoin plummeted from 93,000 to 88,500, a decline of over 4.3%, while Ethereum followed with a drop of over 5%. Market capitalization evaporated nearly 2 trillion RMB within just 24 hours. This was not an isolated incident but the result of multiple risk factors triggering simultaneously.

Chain Reaction of Capital Outflows: From Macro Policies to Market Liquidity Dry-Up

The Federal Reserve still holds the reins of the crypto market’s fate. In November, US job openings unexpectedly rose, inflation remained sticky and below expectations, and market expectations for a rate cut in December dropped sharply from 70% to 44.4%. Powell’s statement that “a rate cut is not on the agenda yet” instantly compressed the valuation space for risk assets.

Currently, Bitcoin and US dollar interest rates show a 90% negative correlation, meaning any upward revision in rate expectations will directly trigger capital flight. The performance of Bitcoin spot ETFs confirms this: seven consecutive weeks of net outflows, with $88 million flowing out in the last week of November alone — a month-over-month increase of over 42%. The retreat of institutional funds not only drained liquidity support but also led to insufficient order book depth on exchanges — a small amount of large sell orders can trigger chain reactions of decline, exposing market fragility.

Regulatory Concerns and Confidence Crisis: The Cumulative Effect

The US CLARITY Act faces obstacles in the Senate, making its enactment before 2026 unlikely. Domestically, the central bank reiterated the risks of virtual currency trading speculation at the end of November, deeming stablecoins as illegal financial activities. Under double regulatory pressure, market confidence plummeted — the Crypto Fear & Greed Index fell to an all-time low of 11, the lowest in history.

This is not rational risk assessment but a prelude to collective panic. The loss of confidence directly amplifies price volatility, shifting the market from cautious observation to flight.

Subtle Shift in Long-Term Holders’ Selling and Bull-Bear Distribution

Long-term holders, regarded as the “stabilizers” of the market, sold a total of 800,000 BTC over the past month, marking the largest reduction since January 2024. This signal is especially critical — core investors’ expectations for the future have weakened, and circulating supply has surged. When holders start to realize profits, the market’s confidence line is directly broken, and once a downtrend forms, it becomes difficult to reverse in the short term. On-chain data shows the number of addresses holding coins has reached 55,001,982, but the structure of holdings within these addresses is undergoing subtle changes — large holders reducing their positions while retail investors panic, reaching a critical point in the bull-bear distribution.

Deadly Amplification by High Leverage

After breaking the 90,000 key support level, 15 billion in leveraged positions triggered forced liquidations. 220,000 traders were wiped out in the volatility, with 12.2 billion in capital instantly gone. Over 90% of the liquidated accounts used leverage of over 10x — essentially, this was not investing but gambling. Price declines triggered passive liquidations, and the selling pressure intensified, causing prices to fall further — a vicious cycle. High leverage magnified downward volatility, becoming the most lethal catalyst in this round of sharp decline.

Current Market Status and Key Support Levels

Bitcoin is currently finding short-term support around 89,000, but the rebound momentum is weak. Based on market forecasts, support levels may be at 82,000, with the 80,000 mark likely serving as a strong support. In the short term, the market is expected to fluctuate below 90,000.

Meanwhile, Ethereum shows relative resilience, with a 3.76% increase over the past 24 hours, diverging from Bitcoin and reflecting a rebalancing of bullish and bearish distribution within the market. The key to market recovery depends on regulatory clarity and the progress of stablecoin compliance. If institutional funds do not flow back and policies do not shift clearly, the market will struggle to see a substantial rebound.

Fundamental Reflection: From “Digital Gold” to Risk-Dependent Asset

This round of crash once again confirms that Bitcoin has long since diverged from the narrative of “independent of traditional finance.” It is no longer a safe haven asset but a risk asset deeply tied to macro policies and global regulatory dynamics. Federal Reserve policy directions, actual interest rate changes, and institutional capital flows — these are the core variables determining its long-term trend.

Investors need to abandon the illusion of “leveraged quick riches” and face the high volatility nature of crypto assets. In a market where bull-bear distribution is constantly changing, respecting market laws, focusing on macro cycles and fundamentals will enable more stable responses to the next turning point.