Bitcoin opens December down 5.3% and returns to $86,000

Source: PortaldoBitcoin Original Title: Bitcoin today: BTC opens December down 5.3% and returns to $86,000 Original Link: https://portaldobitcoin.uol.com.br/bitcoin-hoje-btc-abre-dezembro-em-queda-de-53-e-volta-para-us-86-mil/ Bitcoin opened the month of December with a strong decline, falling 5.3% and dragging Ethereum, XRP, and other altcoins down with it.

The main cryptocurrency has already accumulated a decline of more than 21% in the last month, ending October in negative territory.

Bitcoin plummeted to an intraday low of $85,694 and is currently trading near $86,579, 31% below its all-time high. Beta assets like Ethereum and XRP, which follow Bitcoin's movements, are down 5.7% and 7%, respectively, highlighting the delicate situation among altcoins.

As a result of the sudden drop, liquidations in the crypto market surged to $637 million — around $568 million in long positions, which bet on the rise of the assets.

What causes the drop in Bitcoin?

The short-term factors behind the drop in Bitcoin are “simple”. A rapid drop driven by momentum forced exaggerated liquidations of long positions (more than half a billion dollars), which amplified selling in the spot and derivatives markets. This cascading effect is what turns a correction into a sharp short-term crash.

An important catalyst related to the crypto sector was the comment from the CEO of a large technology company about selling Bitcoin. “We can sell Bitcoin and we would sell Bitcoin if necessary to finance our dividend payments below 1x mNAV,” stated the executive.

Comments from large holders listed of BTC can generate fear because they alter investors' perception of the supply dynamics — even if these comments are conditional and do not indicate immediate intention to sell.

The recent downgrade of the rating by S&P and the repercussions generated due to the composition of the company's reserves are a more persistent vulnerability.

Concerns about Tether's insolvency

In prediction markets, concerns about possible insolvency of Tether if Bitcoin and gold fall by 30%, raised by industry analysts, also contributed to the decline over the weekend.

Analysts highlighted that a drop of about 30% in their positions in gold and Bitcoin would deplete their assets, and then USDT would, in theory, be insolvent.

When participants begin to fear that the largest stablecoin issuer in the market may suffer damage in a stress scenario, liquidity premiums widen and margin desks can reduce risk, which increases volatility across the entire crypto market.

Another factor that may have contributed to the already pessimistic market sentiment is the reiteration that activities involving cryptocurrencies are considered illegal in certain countries and the raising of concerns about stablecoins.

For December, analysts project a turbulent and volatile trading environment, without a clear trend — with a possible “short-term position wash that pressures the leveraged, followed by a rotation where long-term buyers seek value.”