Here’s Why The Crypto Market Is Down Today As Bitcoin (BTC) Price Hits $85K

October and November were not great months for crypto. The market dealt with several liquidation spikes, heavy volatility, and even saw the Bitcoin price drop significantly. Many traders were hoping December would finally bring relief and maybe even a strong end-of-year rally.

But on the very first day of the month, everything turned red again. The crypto market is down 5.26% today, with total market cap at $2.92T. Bitcoin has dropped 5.3% to $85K, and Ethereum, Solana, BNB, and XRP are all down more than 5% in the last day.

What the Crypto Market Is Showing Right Now

The Bitcoin price fell below $90K in a sharp move that wiped out $130B from the crypto market in just two hours. In the last 60 minutes alone, more than $204M in positions were liquidated, with nearly all of it coming from long traders who were caught off guard.

These sudden wicks are happening more often because liquidity is thin, especially during late-night and weekend trading. When a bit of sell pressure hits a thin order book, the drop becomes exaggerated.

Even analysts are saying this is not a fundamental decline. It’s a leverage-driven market, and the sudden $4,000 Bitcoin drop with no news proves it.

With so many traders using high leverage, any small move can trigger a long liquidation cascade, which then causes more selling, and the cycle repeats.

Leverage Liquidations Sparked the First Wave of the Drop

More than $609M in leveraged positions were wiped out in the last 24 hours. Bitcoin alone accounted for $185M of those liquidations, and 85% of them were long positions.

Open interest fell by 1.13%, showing that traders are exiting the market rather than re-entering positions. Average funding rates were still slightly positive, meaning traders were leaning too heavily on bullish bets just as BTC slipped below $86K.

Once the $86K level broke, stop-loss orders triggered one after another. With leverage stacked high and liquidity running thin, the chart spiraled downward quickly.

Japan’s Bond Yield Spike Added More Pressure

Japan’s 2-year government bond yield climbed above 1% for the first time since 2008. That strengthened the yen and made investors more cautious about risk assets. Many traders began unwinding carry trades – borrowing cheap yen to buy Bitcoin and other crypto assets – a strategy that actually fueled earlier rallies in 2025. As Japan’s bond yields rise, those carry trades are no longer appealing, so money is moving back into safer markets.

If the Bank of Japan hints at more rate hikes, this pressure could continue into mid-December.

In addition, the total crypto market cap fell below the $2.89T Fibonacci swing low. That level had been holding for weeks, and losing it invalidated the near-term bullish structure. Now traders are targeting the next support zone near $2.74T, which was last seen in April 2025.

The RSI14 sits around 36.86 on the total market chart, meaning there is still room for more downside before the market becomes oversold. Sellers are dominating around the 7-day SMA, and buyers have not stepped back in yet.

What Happens Next?

This drop looks more like a liquidity and leverage event than a real shift in fundamentals. Analysts point out that “this isn’t a bear market, it’s a leverage market.” When most of the order book is inactive and traders are using high leverage, sharp moves become normal.

If the Bitcoin price stabilizes around $85K and open interest continues to decline, the market could calm down in the next few days.

But if another wave of selling hits during low-liquidity hours, we could see more sharp wicks. Traders are now watching the $83K–$84K region for Bitcoin as the next key support.

For December to recover, the market needs lower leverage, stronger spot demand, and a return of liquidity. Until then, volatility remains the only guarantee.