The crypto derivatives market recorded $637 million in liquidations on Monday, December 1, 2025, with Bitcoin, Ethereum and XRP absorbing the steepest losses. The cascade began during the early Asian session and exposed how concentrated leverage and thin liquidity can rapidly accelerate downside volatility across major tokens.
Long-heavy deleveraging magnified price declines
The liquidation wave was dominated by long positions, with roughly $568 million wiped out as margin calls triggered forced exits. Bitcoin fell to an intraday low of $85,694 — a drop of roughly 5% in 24 hours — while Ethereum and XRP declined about 5.6% and 6.5% respectively, pushing total crypto market capitalization below $3 trillion.
A classic deleveraging feedback loop emerged: initial selling drove prices lower, automated liquidations added further sell pressure, and early-session liquidity constraints amplified slippage. This pattern remains a structural vulnerability in derivatives markets when crowding meets off-peak market conditions.
Order-book depth deteriorated quickly across major centralized and derivatives venues, and the concentration of liquidations almost entirely on the long side signaled directional overcrowding rather than protocol-level failure.
Sentiment deteriorated further as the CEO of Strategy suggested potential sales from a 649,870 BTC treasury — valued near $56.26 billion — shifting expectations of future supply and triggering defensive positioning. The market is highly sensitive to statements from large holders, as perceived sell-side pressure can accelerate deleveraging before any real movement occurs.
Liquidity stress worsened as a prominent warning suggested that a 30% decline in Bitcoin and gold could threaten the solvency of the largest stablecoin issuer, raising settlement-rail risk at a fragile moment. Even hypothetical solvency fears can fuel liquidation spirals when confidence in funding assets weakens.
Regulatory tone added weight to the downturn when a major central bank reiterated the illegality of crypto activity within its jurisdiction, reinforcing negative sentiment across global risk markets. Observers labeled the event a “structural liquidity flush,” emphasizing that market architecture and leverage positioning — not technical failure — drove the breakdown.
The December 1 cascade highlighted concentrated leverage and stablecoin confidence as core systemic pressure points. For trading desks and risk teams, enhanced monitoring of whale communications, reserve disclosures and intraday liquidity conditions remains essential to managing future stress events.