The cryptocurrency market has come under significant pressure again at the start of December 2025. The total market capitalization dropped below $3 trillion, hovering around $2.95 trillion, shaking investor confidence in major assets like Bitcoin, Ethereum, and XRP.
This sudden downturn comes amid volatile conditions and thinning liquidity. In this article, we’ll explore the main reasons behind this drop, its impact on bitcoin prices, and what investors might expect moving forward.
Sharp Decline in Bitcoin, Ethereum, and XRP
Over the past 24 hours, bitcoin prices have fallen more than 4%, dropping to approximately $86,744. Bitcoin’s market cap now stands near $1.73 trillion, reflecting the strong correlation between price and market sentiment.
Ethereum has also seen a notable decline, trading near $2,841, extending its weekly losses to around 5%. Meanwhile, XRP has slid to about $2.06, down over 6% in the past week.
Other major cryptocurrencies have also been affected. Binance Coin (BNB) dropped to $835, Solana is trading near $127, and Dogecoin fell to around $0.1385. Even Cardano (ADA), known for its relative stability, slipped roughly 6% to $0.3899. This widespread sell-off highlights how vulnerable the crypto market remains to shifts in sentiment and liquidity conditions.
Thin Liquidity and High Leverage Worsen the Price Drop
One of the main factors fueling this sharp decline is the thinning liquidity in the market, especially during weekend trading sessions. When liquidity dries up, order books become more susceptible to heavy selling pressure.
Data shows that nearly $400 million worth of leveraged long positions were liquidated within an hour, accelerating the price decline.
This pattern has repeated multiple times throughout 2025, particularly during Friday night to Sunday sessions when market maker activity slows down. Currently, leverage levels in futures markets are near record highs, meaning many traders have opened positions using borrowed funds.
When prices start to fall, highly leveraged positions are forcibly liquidated, adding to selling pressure and creating a chain reaction.
The impact of these liquidations isn’t limited to the positions themselves, it drags down the entire market. Bitcoin prices have become highly sensitive to these dynamics, where even small dips can trigger large-scale sell-offs that push prices further down.
Also read: Bitcoin Price Today Movement: The Strong Influence of 5 Global Crypto Figures in 2025
No Fundamental Trigger, Just Market Fluctuations
Despite the severity of this price drop, analysts agree that no fundamental event triggered this crash. There have been no major regulatory announcements, no macroeconomic shocks, and no significant industry developments to explain the sudden plunge.
Instead, this appears to be a structural market correction caused by excessive leverage and thin trading conditions. Volatility is expected to remain elevated while liquidity remains scarce, especially over weekends. However, experts believe that as liquidity returns, the market could stabilize and possibly rebound.
For investors and traders, understanding that such fluctuations are part of the inherently volatile crypto market is crucial. Managing risk and avoiding emotional reactions to sudden drops in bitcoin prices is key to navigating this environment.
What to Expect Next for Bitcoin and the Crypto Market?
Given current conditions, high volatility is likely to persist in the coming days. Investors are advised to stay cautious, avoid panic-driven decisions, and focus on long-term fundamentals. Looking ahead, the market is expected to find a new equilibrium once liquidity flows back.
Also read: Bitcoin Price Today Still Dominant and Strong: Here Are the 10 Cryptocurrencies Competing in 2025
As liquidity improves, the selling pressure from forced liquidations will diminish, potentially helping to stabilize bitcoin prices and other cryptocurrencies. Still, it’s important to monitor regulatory developments and market news closely to assess ongoing risks and opportunities.
The recent sharp decline in Bitcoin, Ethereum, and XRP prices isn’t driven by fundamental issues but rather by a market environment characterized by thin liquidity and high leverage.
Bitcoin prices fell over 4% rapidly due to forced liquidation of long positions, triggering a cascading sell-off that worsened market conditions. While volatility will likely continue, there’s hope for stabilization as liquidity returns. Investors should remain calm, manage risks carefully, and stay informed to make well-grounded decisions during these turbulent times.
