Cryptocurrencies tumbled on Monday, with Bitcoin dropping up to 6% during trading.
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Why Is Bitcoin (BTC) Dropping Today? — 12/01/25
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Bitcoin (BTC) has kicked off December with a sharp pullback. BTC was last down 4% at $86,477 after touching a 24-hour low of around $85,700. The decline comes amid renewed investor caution, driven by broader economic uncertainty, lower risk appetite, and rising concerns over a potential liquidity crunch in crypto markets.
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Bitcoin Price Slips as Yearn Finance Pool Breach Shakes Crypto Markets
The latest sell-off could have been triggered by a warning sign about liquidity at the DeFi platform Yearn Finance (YFI). Here, liquidity means how easily an asset can be bought or sold without the price crashing.
The company said it was checking an “incident” in its yETH liquidity pool — a shared pot of crypto that helps people trade smoothly. Early reports suggested a security flaw may have allowed a hacker to create a huge number of yETH tokens out of thin air. This is similar to someone printing fake money and dumping it into a bank, making it look like there’s more cash than actually exists.
The issue quickly spread into the wider crypto market, sparking heavy volatility in related digital assets. Bitcoin and several other cryptocurrencies saw sharp, sudden drops as fear rippled across decentralized platforms.
BTC Remains Volatile Ahead of Fed Signal
Bitcoin investors are heading into a crucial week, with Federal Reserve Chair Jerome Powell set to speak on December 1. Markets are already bracing for potential swings across crypto and other risk assets, with expectations for a rate cut in December.
Additionally, the end of quantitative tightening (QT) on December 1 marks a shift toward easier monetary policy from the Federal Reserve, which may increase dollar liquidity and support broader market demand for assets like Bitcoin. For context, QT is when the Federal Reserve pulls money out of the financial system to slow things down.
Overall, Bitcoin dropped more than 20% in November, ending a tough month. Weak economic conditions, ETF withdrawals, and ongoing BTC selling all added to the decline, even though investor interest was strong earlier in the year.
Year-to-date, BTC is down by 2.73%.
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