The market took a sudden turn. Overnight, U.S. stocks experienced a broad sell-off, with the Dow Jones Industrial Average briefly falling nearly 1%. Most major tech stocks declined, with Broadcom dropping over 4%, while Google, Microsoft, Meta, and TSMC fell more than 1%. The VIX volatility index surged over 5%.
Analysts noted that the pullback in U.S. stocks was linked to a sharp decline in crypto assets. The correlation between cryptocurrencies and other high-risk assets, including equities, has become a defining feature of recent trading sessions.
On December 1 (Beijing time), the cryptocurrency market faced heavy selling pressure, with Bitcoin briefly plunging below $84,000. At the time of writing, Bitcoin was down over 5%, while Ethereum, XRP, and HYPE plummeted more than 7%. Data from Coinglass showed nearly $1 billion in crypto derivatives liquidations within 24 hours, affecting 273,200 traders.
**Crypto Market Collapse** The first trading day of December saw U.S. stocks open lower, with all three major indices closing in the red. The Dow fell 0.9%, the Nasdaq dropped 0.38%, and the S&P 500 declined 0.53%, ending a five-day winning streak.
Most big tech stocks retreated, with Broadcom down over 4%, while Google, Microsoft, Meta, and TSMC lost more than 1%. Nvidia and Apple bucked the trend, rising over 1%. Synopsys, a chip design software firm, surged over 4% after Nvidia invested $2 billion in its shares.
Crypto-related stocks also tumbled, with BMNR crashing over 12%, Circle down nearly 5%, and Robinhood and Coinbase dropping more than 4%.
Bitcoin briefly dipped below $84,000, hitting a low of $83,800, before stabilizing with a 5% loss. Ethereum, XRP, and HYPE plunged over 7%, while DOGE and ZEC plummeted more than 9% and 21%, respectively.
Analysts suggested that December began with a risk-off sentiment in U.S. markets, citing weak inflows into Bitcoin ETFs and a lack of dip-buying. Structural headwinds are expected to persist, with $80,000 seen as Bitcoin’s next critical support level.
Recent data showed U.S. spot Bitcoin ETFs recorded just $70 million in net inflows last week, while outflows over the past month totaled $4.6 billion. Pressure stemmed largely from iShares Bitcoin Trust, which saw five consecutive weeks of withdrawals—its longest outflow streak since its January 2024 launch.
**Global Bond Market Turmoil** Bank of Japan Governor Kazuo Ueda signaled a potential rate hike this month, triggering volatility in global bond markets. Japan’s two-year yield surged above 1% for the first time since 2008. The U.S. 10-year Treasury yield jumped nearly 8 basis points to 4.09%, its biggest rise in over a month. Rising yields indicate bond sell-offs.
Jeff Ko, chief analyst at CoinEx, noted: "Higher Japanese bond yields are amplifying macro-level downward pressure. Investors are assessing risks of accelerated unwinding in yen carry trades, which historically weigh on global risk assets, including crypto."
S&P Global Ratings downgraded its assessment of Tether’s stability to the lowest level, warning that a Bitcoin price drop could leave the stablecoin undercollateralized.
**Fed Uncertainty Looms** This week’s key economic data will shape expectations for the Federal Reserve’s rate path into 2026. Concerns are mounting that the figures may complicate the outlook for rate cuts.
On December 1, the ISM reported U.S. manufacturing activity contracted at its fastest pace in four months, with new orders weakening. The November ISM Manufacturing PMI came in at 48.2, below forecasts of 49 and marking nine consecutive months below the 50 threshold.
New orders fell to 47.4, the sharpest contraction since July, while employment and input price indices also reflected soft demand and rising costs.
ISM’s Susan Spence attributed the downturn to tariff uncertainty, with clients delaying orders amid unclear cost projections.
Following the data, market expectations for a December Fed rate cut rose to 87.6%, with a 69.3% chance of a cut by January.