Cryptocurrency market capitalization fell by $ 140 billion in just a few hours

The capitalization of the digital asset market lost $ 140 billion in a few hours, falling to a three-week low of $ 3.02 trillion. According to analysts, the collapse was led by bitcoin, which lost support at $ 90,000 and fell to $ 85,200, the lowest since December 2. On Tuesday morning, Asian time, the first cryptocurrency was trading just below $ 86,000.

Analysts named several reasons for the drop. Trader NoLimit attributed it to another tightening of bitcoin mining regulations in China, which forced local miners to turn off their equipment. Another analyst, Sykodelic, believes that the sharp decline was caused by derivative markets due to the high level of open positions. According to him, «the market has become too pessimistic — traders are opening shorts en masse, creating excess liquidity, which only exacerbates the fall.»

According to the Deribit platform, the volume of open positions at the $ 85,000 strike exceeded $ 2 billion. This forced some short sellers to hedge their risks by selling bitcoin in spot or futures, which put even more pressure on the market. Analyst James Cheek noted that «the stress on the bitcoin market is now the highest since 2022,» pointing to about $ 100 billion in unrealized losses, a decline in hashrate, a drop in the value of exchange-traded funds, and a discount in trader companies below net asset value.

Another factor was the decision of the US Senate to postpone consideration of the bill on the structure of the crypto market until early 2026. A representative of the Senate Banking Committee confirmed that the bill would not be considered this year, although the bill, which would give the Commodity Futures Trading Commission (CFTC) authority over spot markets, was considered a key step in regulating the industry.

The market had expected the document to be passed by the end of the year, but the delay increased uncertainty and triggered large-scale capital outflows. The combined effect of increased regulatory pressure, reduced liquidity, and speculative activity led to another massive sell-off in digital assets, which analysts are already calling one of the sharpest this quarter.