Crypto Carnage: December’s Sharp Selloff Fuels Extreme Fear Across Markets

The crypto market suffered a severe sell-off in the first week of December, deleting tens of billions in market cap and driving attitude into "extreme fear." Bitcoin fell well below its October high close to 125K and its early-November 100K level, dropping from the low-90K zone to the mid-80Ks intraday. With Ethereum falling into the high-2,000s and other assets like SOL, XRP, and DOGE registering greater percentage declines, major altcoins performed even worse, extending November's downturn into a complete collapse.

A perfect storm triggered panic in the early Asian session as a DeFi event in a Yearn Finance yETH pool coincided with already-fragile confidence. Over-leveraged long positions evaporated, causing hundreds of millions in futures liquidations that automatically speeded the fall. Adding to the fire, institutional demand deteriorated as spot BTC and ETH ETFs continued substantial outflows from November, hence removing a critical support layer at exactly the moment the market required it.

The sell-off highlighted the ongoing fragility of cryptocurrency against a background of impending U.S. macro data and increased risk aversion. While Ethereum hovers near key support ahead of forthcoming upgrades and Strategy Inc. flexes its cash reserves to calm nerves over its massive Bitcoin treasury, the broader mood remains grim — with contagion fears and “extreme fear” dominating headlines as the industry braces for more turbulence.