Bitcoin experienced a significant price drop early Monday, falling sharply to the mid-$84,000s and declining 8% over 24 hours. This downturn extended a two-month drawdown that has erased over 30% from October’s record highs, with the world’s largest digital asset trading between a 24-hour high of $91,866 and a low of $84,722. The price briefly rebounded above $90,300 amid ongoing Q4 volatility but later settled around $86,469 at the time of writing, marking a swift reversal from a tentative recovery seen last week.

Following a plunge below $81,000 on November 21, Bitcoin had steadily climbed through the end of November, even pushing above $92,500 during Black Friday’s morning session. However, this momentum reversed on Sunday evening, leading to BTC slipping back below $85,000 by early Monday.

Multiple forces are identified as contributing to this renewed selloff. One immediate shock stemmed from a security incident at Yearn Finance. A flaw in the protocol’s yETH pool allowed an attacker to mint an abnormally large amount of tokens, flooding the pool with invalid supply. This exploit triggered a rush for the exits across the Decentralized Finance (DeFi) ecosystem, with the stress spilling over into major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).

Concurrently, macro pressures have been building. A sharp spike in Japanese government bond yields, part of a broader global repricing of interest-rate expectations, initiated a risk-off movement during Asia trading hours. This development particularly impacted an already fragile, low-volume crypto market. Comments from Bank of Japan Governor Kazuo Ueda hinted at a potential December rate hike, which would be Japan’s first departure from its negative interest rate policy in years. These remarks caused Japan’s 30-, 10-, and 2-year government bond yields to reach their highest levels since 2008. A stronger yen resulting from such a move could compel hedge funds that borrow cheaply in Japan to unwind their carry trades, thereby adding further pressure on Bitcoin and other risk assets.

Furthermore, the market has been characterized by thin liquidity. According to 10x Research, the previous week represented one of the lowest-liquidity stretches since July, resulting in thin order books. This amplified the impact of institutional selling, leading to a deeper drawdown than fundamental factors alone might suggest. Bitcoin’s market depth notably evaporated over the weekend, transforming what could have been a modest correction into a full-scale liquidity event. Over 220,000 traders faced liquidation within 24 hours, incurring total losses exceeding $630 million. The derivatives market also reflected this imbalance, with Bitcoin price futures open interest falling by $1.1 billion leading into the decline, indicating that traders had already begun de-risking.

Monetary policy uncertainty from the Federal Reserve also remains a central concern for investors. While markets currently assign an 80%–87% probability of a 25 basis point rate cut at the Fed’s December 9–10 meeting—an event that would typically support Bitcoin price by boosting liquidity and risk appetite—traders fear a sharper unwind across risk assets if the Fed opts to hold rates steady.

Adding another layer of complexity were recent corporate developments. Strategy Inc., formerly MicroStrategy, announced on Monday the creation of a $1.4 billion reserve, funded by common-stock sales. This reserve is intended to cover at least 21 months of preferred-stock dividend payments amid Bitcoin’s ongoing slide. The company, which currently holds 650,000 BTC, also reported purchasing an additional 130 BTC last week for $11.7 million. Separately, last week saw fresh disclosures revealing BlackRock’s increased exposure to its own spot Bitcoin ETF, IBIT, with its Strategic Income Opportunities Portfolio now holding 2.39 million IBIT shares valued at $155.8 million, a 14% increase from June. This signals deeper internal allocation to BTC-linked assets. Meanwhile, JPMorgan rolled out a new derivative-style structured note tied to IBIT, allowing institutions to bet on its future price. This note offers a 16% fixed return if targets are met next year, with potential for up to 1.5x upside by 2028 if Bitcoin surges.