Early Monday plunge: Why is the crypto market in panic again?
Since the "1011 crash," capital inflows and macro uncertainties have had a severe negative impact on the crypto market.
Written by: 1912212.eth, Foresight News
After BTC slowly climbed from $86,000 to $93,000, the market had yet to pause. At 8 a.m. on December 1 (GMT+8), BTC plunged 3.7% within an hour, dropping from $90,000 to below $87,000. ETH also fell from $3,000 to around $2,800, and altcoins suffered another widespread decline.
According to Coinglass data, in the past 4 hours, liquidations across the network totaled $434 million, with long positions accounting for $423 million.
Market sentiment has once again fallen into a state of extreme fear. This time, the timing of the sell-off was extremely precise. The last hour of November was forcefully hammered into a solid bearish candle with a very long upper shadow, completely destroying the last bit of confidence among the bulls. With the monthly candle closing bearish, technicals directly declared a "bull market structure breakdown," and all bullish weekly and monthly trends have either collapsed or are on the verge of collapse.
On Polymarket, the probability of BTC rebounding to $100,000 in 2025 has dropped to 35%, while the probability of falling to $80,000 has risen by 15% to 50%.
The real trigger this time was not the Federal Reserve, not Trump’s policies, nor China’s renewed tightening of regulations.
On November 29, the People’s Bank of China convened a meeting of the coordination mechanism for cracking down on virtual currency trading and speculation. Attendees included responsible officials from the Ministry of Public Security, the Cyberspace Administration of China, the Central Financial Office, the Supreme People’s Court, the Supreme People’s Procuratorate, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Justice, the People’s Bank of China, the State Administration for Market Regulation, the National Financial Regulatory Administration, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange. The meeting emphasized that virtual currencies do not have the same legal status as legal tender, are not legally compensatory, and should not and cannot be used as currency in the market. Activities related to virtual currencies are considered illegal financial activities. Stablecoins are a form of virtual currency and currently cannot effectively meet requirements for customer identification, anti-money laundering, etc., and are at risk of being used for money laundering, fundraising fraud, and illegal cross-border fund transfers.
The meeting required all units to adhere to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as guidance, fully implement the spirit of the 20th National Congress of the Communist Party of China and its subsequent plenary sessions, and make risk prevention and control the eternal theme of financial work. The prohibition policy on virtual currencies must continue, and illegal financial activities related to virtual currencies must be persistently cracked down upon. All units should deepen coordination and cooperation, improve regulatory policies and legal bases, focus on key links such as information flow and capital flow, strengthen information sharing, further enhance monitoring capabilities, crack down on illegal and criminal activities, protect the safety of people's property, and maintain the stability of economic and financial order.
The broad scope of departments involved in this crackdown, as well as the categorization of stablecoins as a form of virtual currency and the highlighting of risks such as money laundering and fraud, have undoubtedly poured cold water on already fragile market confidence.
The "94" policy in 2017 and the "519" policy in 2021 both caused significant pullbacks in the crypto market within a short period of time.
The market has never lacked stories, and this time the story is called "the last batch of Chinese funds forced to exit." Once the story is over, the long winter begins.
However, some opinions also point out that since the "1011 crash," capital inflows and macro uncertainties have had a severe negative impact on the crypto market.
Rob Hadick, General Partner at Dragonfly, stated that this deleveraging event, triggered by low liquidity, poor risk management, and weak oracle or leverage mechanisms, has caused significant losses and brought great uncertainty.
Boris Revsin, General Partner and Managing Director at Tribe Capital, shares the same view, calling this a "leverage washout" that has triggered a chain reaction across the market. At the same time, the macro environment has become less favorable: short-term rate cut expectations have faded, inflation remains stubborn, the job market is weakening, geopolitical risks are rising, and consumer pressures are increasing.
Anirudh Pai, Partner at Robot Ventures, emphasized concerns about a slowdown in the US economy. Key growth indicators—including the Citi Economic Surprise Index and 1-year inflation swaps (derivatives used to hedge inflation risk)—have already started to weaken. Pai noted that this pattern has appeared before previous recession fears, fueling broader risk aversion.
Dan Matuszewski, co-founder of CMS Holdings, said that apart from tokens supported by buyback mechanisms and DAT (Digital Asset Treasury) companies, there is almost no "incremental capital inflow" into the crypto market. As new demand dries up and ETF inflows no longer provide effective support, price declines are accelerating.
Analyst Timothy Peterson stated that the current bitcoin trend is highly similar to the 2022 bear market. From both daily and monthly charts, the correlation between this year and 2022 for bitcoin’s daily chart is 80%, and for the monthly chart it is as high as 98%. If history repeats itself, a true rebound in bitcoin prices may not occur until the first quarter of next year.
