On December 1, 2025, the cryptocurrency market suffered a sharp sell-off that produced $637M in total liquidations across Bitcoin, Ethereum and XRP as prices unwound aggressively. Bitcoin fell below $86,000 and momentarily reached $84,000; Ethereum slipped into the $2,700–$2,807 range, and XRP dropped to $1.91 after an 8.72% 24-hour decline, underscoring how quickly leveraged positions can dissolve under stress.
Cascading leverage and thin liquidity accelerated the downturn
The immediate cascade reflected a leverage-heavy structure with roughly $568M of liquidations coming from long positions. This magnified volatility and turned initial declines into a self-reinforcing downward spiral.
Weekend trading conditions added fragility, as reduced liquidity and shallow order books transformed a standard correction into a deeper market flush. Wenny Cai of SynFutures called the episode a “structural liquidity flush” shaped by elevated leverage and insufficient depth. Macro signals intensified fear, including remarks from Japan’s central bank governor hinting at rate shifts, the pending ISM US Manufacturing PMI print and upcoming Federal Reserve commentary that heightened cross-asset uncertainty.
Concerns surrounding stablecoins further weakened sentiment. Public warnings about solvency risk for the largest stablecoin circulated during the sell-off, increasing psychological pressure as liquidity thinned. Meanwhile, reports that Strategy CEO Phong Le signaled potential Bitcoin sales to fund dividends introduced supply overhang concerns, showing how actions from large holders can shift balance and behavior rapidly.
XRP’s reaction was unusual: the token fell despite multiple new spot ETF launches that would typically support liquidity and adoption. However, increased trading volumes suggested that many participants were reallocating exposure rather than fully exiting, with some institutions interpreting the move as an opportunity to accumulate.
The event underscored structural fragility in crypto markets, reinforcing calls for greater transparency on leverage, reserves and derivatives positioning. Better disclosures from exchanges, issuers and stablecoin operators would aid supervisors and traders in assessing systemic liquidity risk, especially as macro influence remains strong.
Ultimately, December 1 showed how macro cues, concentrated leverage and episodic liquidity gaps can converge into large, rapid losses across digital assets. Participants now watch the ISM PMI release and upcoming Federal Reserve guidance as short-term catalysts that may determine whether volatility eases or widens.