Bitcoin craters below $86,000, Ethereum dips 7% in massive crypto wipeout

Core Insights - The cryptocurrency market is experiencing significant volatility, with Bitcoin and Ethereum seeing substantial declines, leading to billions in value being erased [1][2][3] - Bitcoin dropped as much as 6% to below $86,000, while Ethereum fell over 7% to around $2,800, indicating a broader market downturn [1][8] - The recent slump follows a period of instability that began with the liquidation of $19 billion in leveraged bets in early October, shortly after Bitcoin reached an all-time high of over $126,000 [2][10] Market Performance - Bitcoin lost 16.7% of its value in November, marking its second-worst month of 2025, despite recovering some gains last week [2][6] - The overall market saw Bitcoin decline over 19% from June to December 1, with other cryptocurrencies like Solana and Dogecoin experiencing losses between 15% and over 45% [6][10] - The market had previously rallied due to institutional inflows, ETF launches, and network upgrades, but the fourth quarter has seen a swift reversal in fortunes [5][6] Investor Sentiment - Market sentiment remains fragile as traders brace for further volatility, with a noted lack of dip buyers and meager inflows into Bitcoin exchange-traded funds [6][10] - Risk appetite has diminished across global markets, impacting equities and cryptocurrencies alike, as indicated by the recent performance of Asian stocks [6][7] Leverage Concerns - High levels of leverage in the cryptocurrency market, with some exchanges offering up to 200x leverage, pose a risk for violent liquidations during price swings [10][11] - The predominantly retail-driven nature of the crypto market contributes to instability, as retail investors react differently compared to institutional investors [11][12]