A new wave of liquidations, China’s renewed warnings, and macro uncertainty trigger fresh anxiety across digital-asset markets.
MARKET INSIDER – Bitcoin and Ethereum fell sharply on Monday as the crypto market’s weeks-long downturn resumed, underscoring intensifying investor nerves and the growing impact of leverage-driven volatility. Bitcoin slid more than 5% to trade near $86,435, while Ethereum dropped over 6% to $2,843. Solana plunged more than 7% to about $127, and other major tokens, including Dogecoin, were deep in the red.
The latest decline follows a warning from the People’s Bank of China over the weekend, which reiterated that digital-currency activities remain illegal. The statement sent Hong Kong-listed crypto-exposed stocks lower and added new pressure to global sentiment already weakened by the October sell-off. The retreat aligns with a broader risk-off mood at the start of the month, with investors stepping back amid macroeconomic uncertainty.
Ben Emons, CIO of Fedwatch Advisors, told Market Insider that Monday’s reversal is being linked to a $400 million exchange liquidation, a stark reminder of the enormous leverage embedded across crypto markets. Some Bitcoin exchanges allow up to 200x leverage, he noted, a dynamic that can accelerate selloffs and trigger cascading margin calls. With an estimated $787 billion in perpetual futures leverage outstanding—compared with around $135 billion tied up in ETFs—Emons warned that more liquidations may follow if Bitcoin fails to rebound from current levels.
The downturn has also heightened the correlation between Bitcoin and high-growth stock indices such as the Nasdaq, particularly during October’s sharp cross-asset declines. Yet Emons stressed that retail traders—who dominate crypto markets more than institutional players—respond differently to volatility, adding a layer of unpredictability absent in traditional finance. The decentralized and opaque nature of crypto venues amplifies those risks.
Macro headwinds remain a significant overhang, including uncertainty about U.S. Federal Reserve rate cuts and concerns about stretched valuations in AI-related equities, which contributed to turbulent November trading across risk assets.
As Bitcoin drifts toward $86,000, the market faces a pivotal question: will continued leverage unwinds force another leg down, or can sentiment stabilize before retail panic triggers an even deeper correction?
