Bitcoin prices tumbled sharply at the start of December, fueled by a major decentralized finance hack and macroeconomic anxieties ahead of a key Federal Reserve interest rate decision.
The leading cryptocurrency dropped more than 5% on Monday, December 1, 2025, falling below the $86,000 mark. It briefly hit a 10-day low of $85,694.
This latest slide wiped out over $144 billion from the global cryptocurrency market capitalization. Bitcoin has now corrected more than 30% in a few weeks, down from its all-time high of $126,000 reached on October 6.
The price plunge accelerated from approximately $91,300 the previous night, erasing a five-day recovery that had pushed Bitcoin above $90,000. Prices returned to levels last seen in the latter half of November.
A security incident at Yearn Finance, a prominent DeFi aggregator, played a critical role in exacerbating market panic. Attackers exploited a vulnerability in the yETH liquidity pool. They minted massive amounts of the token, draining funds equivalent to about 1,000 Ether, valued at approximately $3 million.
Total losses from the Yearn Finance exploit amounted to $9 million, with some funds reportedly sent to Tornado Cash for obfuscation, according to analysis from PeckShield. This event triggered widespread panic among traders. It contributed to over $650 million in liquidations across cryptocurrency markets in the past 24 hours, primarily affecting long positions, Coinglass data showed.
Jeff Mei, COO of BTSE, noted the ripple effect. “Given that Yearn is a large DeFi aggregator that moves funds between Aave, Compound, and Curve, traders are likely to fear that panic will cause more withdrawals and exacerbate selling,” Mei said.
The broader cryptocurrency market also felt the impact. Ether (ETH) fell 5% to $2,845, XRP dropped more than 4%, and Solana (SOL) declined 6.41% to $126. The overall market lost 4.5% of its value, extending a bearish trend from November.
November saw record outflows from U.S. spot Bitcoin Exchange-Traded Funds (ETFs), totaling $3.5 billion, the largest since February. Ethereum ETFs also experienced $1.42 billion in outflows.
Analysts attribute the market’s “late-cycle fragility” to shifting investor behavior. Large holders, often called whales, have slowed their accumulation. Meanwhile, retail investors have increased “bounce buying,” a pattern that typically boosts short-term volatility.
Timothy Misir of BRN warned, “It’s more about positioning than fundamentals; it’s a liquidity event and an emotional reset.” Misir also linked the recent slide to external factors such as the Bank of Japan’s yield increase to 1% and a contraction in China’s Purchasing Managers’ Index.
Despite the turbulence, some analysts point to potential upside. CME Group’s FedWatch tool indicates an 87.4% probability of a 25 basis point rate cut by the Federal Reserve this December. Such a move could provide a significant boost to Bitcoin.
Rachael Lucas, a BTC market analyst, suggested Bitcoin could rebound towards $95,000-$100,000 in the coming week if the U.S. central bank eases monetary policy. “BTC behaves like a high-beta risk asset; it needs a real flood of liquidity, not just dovish whispers,” Lucas said. She identified $87,000 as a key support level, with $80,400 as the next critical point if the current support breaks.
Market attention remains fixed on the upcoming Federal Reserve decision. Analysts are also watching for positive ETF flows and on-chain data to signal a recovery. QCP Capital cautioned that without Bitcoin reclaiming the $90,000 level, price action could become “violent.”
Bitcoin was trading just under $85,900 at the time of this report, after a modest recovery minutes prior to $86,197. The cryptocurrency has corrected 21.5% in the last 30 days and 11% over the past year, according to CoinGecko.