Bitcoin Price Drops 12% in One Day—Is Another Crypto Winter Coming?

Bitcoin’s fast slide below $88,000 in the first Asian session of December has rattled crypto markets, wiping more than 6 % off BTC’s value in hours and setting a bearish tone for the month ahead. The sudden drop triggered a cascade of liquidations worth roughly $500 million across leveraged long positions, amplifying volatility as automatic sell orders hit every major exchange. Why is Bitcoin dropping today? 1. Risk-off macro shift: Global equities opened December on the back foot after mixed U.S. inflation data revived fears that the Federal Reserve could keep rates higher for longer, souring appetite for risk assets. 2. ETF outflows: Spot Bitcoin exchange-traded funds, which fueled October’s record high of $126,000, booked a fourth straight week of net redemptions last Friday, draining fresh demand. 3. Leverage unwinds: Funding rates for perpetual futures spiked to multi-month highs last week, leaving the market vulnerable to a “long squeeze” once prices began to slip, according to derivatives data. The November hangover Even before Monday’s tumble, November had already ranked as Bitcoin’s second-worst month of 2025, with the coin shedding about 17 % amid heavy ETF withdrawals and capitulation among short-term holders. From the October peak to today’s lows, almost US $800 billion has been erased from Bitcoin’s market capitalization, underlining the scale of the drawdown. Key support and resistance levels • Immediate support now sits at the psychological $85,000 zone, a level that acted as resistance during June’s breakout. • Below that, analysts flag $81,400—the 200-day moving average—as the line in the sand separating a correction from a deeper bear-market pivot. • On the upside, bulls must reclaim $91,000 to neutralize near-term momentum and reopen the path toward $100k. Market sentiment and outlook On-chain metrics show long-term holders remain in profit, yet short-term holders—coins moved within the past 155 days—are firmly underwater, a setup often associated with capitulation bottoms. Funding rates have reset close to neutral after Monday’s flush, suggesting forced selling may be largely complete. Still, analysts caution that macro headwinds could keep crypto on the defensive until the Fed’s mid-December meeting offers clarity on 2026 rate cuts. “If real yields stay elevated, Bitcoin’s correlation with tech stocks is likely to drag prices lower,” said one Singapore-based trader. What to watch next • Federal Reserve guidance on December 17. • Further ETF outflow/inflow data in the coming week. • Any large-scale miner sales as year-end balance-sheet clean-up begins. Bottom line The latest Bitcoin price drop underscores how quickly leveraged euphoria can flip into panic selling. While long-term fundamentals—from supply halving to institutional adoption—remain intact, near-term sentiment hinges on macro developments and whether dip buyers step in around $85k. For now, traders should brace for elevated volatility as crypto enters the historically choppy final month of the year.