Sharp Crypto Selloff Triggers Widespread Market Panic
The cryptocurrency market experienced dramatic volatility on Monday as Bitcoin plunged below $87,000, triggering a massive liquidation wave that wiped out over $200 million in leveraged long positions within just one hour. The sudden selloff sent shockwaves through the entire digital asset space, with major cryptocurrencies including Ethereum, XRP, BNB, and Solana all dropping 2-4% in the aftermath.
According to data from Cointelegraph, the rapid decline occurred during Monday's Wall Street open, with market commentators describing the sell-off as 'pure manipulation' pointing to significant selling pressure from major exchanges. The liquidation event highlights the ongoing volatility in crypto markets as institutional players continue to influence price action.
Market Sentiment Plummets to Extreme Fear
The Crypto Fear & Greed Index, a widely followed sentiment indicator, has plunged to just 16, indicating 'extreme fear' in the cryptocurrency market. This represents one of the most bearish readings in recent months, reflecting growing anxiety among investors despite Bitcoin trading approximately 30% below its October all-time high of $126,000.
'The market is clearly in a state of panic,' noted crypto analyst David Thompson. 'When you see $200 million in liquidations within an hour, it creates a cascade effect that can push prices much lower than fundamentals would suggest.'
The sentiment collapse extends beyond crypto to traditional markets, with the CNN Fear and Greed Index for US equities sitting at 42 despite the S&P 500 trading near record highs, according to Cryptopolitan.
MicroStrategy Continues Aggressive Bitcoin Accumulation
In a striking contrast to the market panic, Michael Saylor's company Strategy (formerly MicroStrategy) announced another massive Bitcoin purchase of 10,645 BTC for approximately $980.3 million at an average price of $92,098 per coin. This marks the second consecutive week of large-scale acquisitions, following a purchase of 10,624 BTC the previous week.
The company now holds 671,268 Bitcoin acquired for about $50.3 billion at an average price of $74,972 per bitcoin, representing an unrealized profit of over $9.7 billion at current prices, as reported by Invezz.
'We continue to see Bitcoin as the ultimate store of value and will keep accumulating regardless of short-term volatility,' Saylor stated in a recent interview. 'These market corrections actually create better entry points for long-term investors.'
Technical Analysis Points to Key Support Levels
Technical analysts are closely watching several key support levels following the sharp decline. Bitcoin's failure to hold above the $90,000-$93,000 resistance zone led to profit-taking and forced liquidations that compounded downside pressure.
According to The Economic Times, key support levels to watch are $88,000, with failure potentially exposing Bitcoin to $86,000-$87,000, while a move back above $90,000-$91,000 would be needed to stabilize sentiment.
The broader crypto market capitalization now hovers around $3.1 trillion, down 2.4% on the day, with Ethereum trading near $3,000 after dropping nearly 2% and XRP, BNB, and Solana all showing similar declines.
Institutional Interest Remains Strong Despite Volatility
Despite the market turmoil, institutional interest in cryptocurrency appears resilient. Bitcoin ETFs attracted $287 million in net inflows during the past week, while Ethereum ETFs added $209 million, according to recent data. This institutional support has helped prevent more severe declines during periods of retail panic.
The December volatility follows a pattern observed in previous years, where crypto markets often experience heightened price swings during the final month of the year. As BeInCrypto notes, while December 2025 crypto volatility feels extreme to newcomers, it's actually normal market behavior for the asset class.
Market participants are now watching for potential catalysts that could reverse the negative sentiment, including upcoming Federal Reserve decisions and continued institutional adoption. For now, the crypto market remains in a state of heightened alert as traders navigate one of the most volatile periods of the year.