Bitcoin falls again after weak November as bearish sentiment goes on

By Amanda Cooper and Caroline Valetkevitch

NEW YORK/LONDON, Dec 1 (Reuters) - Bitcoin slumped on Monday, with the world's largest cryptocurrency down about 6% and on track for its biggest daily percentage fall since early November, as risk aversion drove investors out of digital and other assets.

Bitcoin was last down 6% at $85,788 and earlier fell as much as 8% to $83,879.01.

The day's move followed bitcoin's biggest monthly drop since mid-2021. Bitcoin shed more than $18,000 in November, as a record amount of money rushed out of the market, making this its largest dollar loss since May 2021, when a number of cryptocurrencies collapsed.

Adding to bearish sentiment around bitcoin on Monday, Strategy - the largest corporate holder of bitcoin - cut its earnings forecast for 2025, citing the weak run in bitcoin. Strategy's shares fell 3.3%.

Over the last 24 hours, crypto liquidations in both long and short positions totalled nearly $1 billion, according to CoinGlass. 

FADING CRYPTO ENTHUSIASM

"Bitcoin seems to be suffering from a fading enthusiasm across crypto as well as the tech world," said Juan Perez, director of trading at Monex USA in Washington.

"The negativity at the moment seems tied to growing concerns about increased market concentration and questionable sustainability of overall growth in that sector, considering the issues of infrastructure as well as less cooperation in trade globally," he said.

Ether also fell on Monday and was last 8.8% lower at $2,756. It lost some 22% in value in November, the most since February's 32% slide.

Stocks recently sold off on concerns about exuberance over the artificial intelligence trade and lofty valuations in technology shares. 

Stocks were mostly lower on Monday, with MSCI's gauge of stocks across the globe last down about 0.40%. The S&P 500 ended down 0.5%.

RISK INDICATOR

Given its short lifespan, there is not much seasonality to guide traders' expectations for how bitcoin usually behaves in December.

On average, bitcoin has tended to rise by around 9.7% in December, ranking it third in terms of performance. October is typically the strongest month, with an average gain of 16.6%, and September the weakest month, with an average loss of 3.5%.

Some strategists were keeping a close eye on bitcoin's correlation with the stock market. Some see bitcoin as a possible leading indicator for risk assets.

Joe Saluzz, co-founder of Themis Trading in Chatham, New Jersey, said crypto and stocks may be linked via exchange-traded funds but are not always correlated.

For example, the stock market was down moderately on Monday while crypto-related assets sold off, he said.

XTB research director Kathleen Brooks said in a note: "Bitcoin tends to be a leading indicator for overall risk sentiment right now, and its slide does not bode well for stocks at the start of this month." 

"There is no obvious driver (on Monday). However, the sharp decline in volatility last week, the VIX fell back below the average for the last 12 months, may have unnerved some investors who remain concerned about an uncertain outlook into year-end," she said. 

CME bitcoin futures also showed the growing bearishness.

Bitcoin futures that expire in three months' time traded at their smallest premium to those that expire this month in at least a year, signaling investors were less inclined to bank on a sustained price rise.

NEGATIVES STACKING UP

Jefferies strategist Mohit Kumar said a number of crypto-negative factors added to the pressure on bitcoin on Monday.

S&P Global downgraded its rating of Tether, the world's largest stablecoin last week, citing an increase in higher-risk assets in its reserves and "persistent gaps in disclosure," which Tether said it "strongly disagrees" with.

Other crypto company shares were down as well, with Coinbase Global falling 4.8%.

Since hitting a record $4.3 trillion in size, the crypto market has lost over $1 trillion in value, according to CoinGecko.

Marc Chandler, chief market strategist at Bannockburn Capital Markets in New York, said the key is that "people are talking about" what is happening to bitcoin.     "I see a lot of people trying to tie the selloff in crypto to the selloff in the other asset markets. But we need to test the narrative. It's just not clear ... but we have to pay attention to it."

(Reporting by Amanda Cooper in London and Caroline Valetkevitch in New York; Additional reporting by Gertrude Chavez-Dreyfuss, Chuck Mikolajczak and Hannah Lang in New York and Shashwat Chauhan; Graphic by Dhara Ranasinghe; Editing by Louise Heavens, Susan Fenton, Rod Nickel and Cynthia Osterman)