Why Bitcoin Is Down Today? Shocking Factors Behind 5% Bitcoin Crash

Bitcoin price dropped hard today, falling below $86,000. This triggered a crypto market sell-off that has erased over $144 billion in value. Bitcoin crashed over 5% amid panic selling, leaving traders and investors wondering why Bitcoin is down today? The major catalysts for Bitcoin’s fall today are a large DeFi hack, liquidations of leveraged positions, changing whales’ behavior, and macro factors. All these factors have led to panic selling in the market, further driving down Bitcoin’s price.

DeFi Hack Adds Fuel to the Bitcoin Crash Today

A major contributing factor to the Bitcoin price decline is the recent exploit of the DeFi platform Yearn Finance. Hackers drained 1,000 ETH from Yearn’s yETH liquidity pool, raising questions over the security of DeFi protocols. This compounded the already weak market sentiment and triggered panic selling across the market, as traders liquidated their positions amid fears of a broader security issue in the DeFi space.

Heavy Sell-Offs and Liquidations

The Bitcoin crash didn’t just start with the DeFi hack. The crypto market has been under pressure since mid-November, with billions of dollars in long positions liquidated each day, making it highly sensitive to even small amounts of selling pressure. The $5,000 dip today erased over $210 billion from the entire crypto market and led to nearly $700 million in liquidations. Some analysts think the selling was the result of a “manipulation dump” by big players trying to drive the price down to get leveraged traders to sell.

Thin Weekend Liquidity Exacerbates the Drop

Low liquidity over the weekend is another factor in Bitcoin’s accelerated plunge. The market usually experiences thin liquidity over the weekend, as many investors take time off, and trading volume is low. When there are not enough buyers and sellers, large sell orders can move the market more easily. Reduced market liquidity, combined with large leverage at cryptocurrency exchanges, triggered forceful liquidations that intensified the Bitcoin crash.

Whales Turn Cautious as Retail Traders Fuel Bitcoin FOMO

Fueling further volatility, Bitcoin whales are acting increasingly cautiously. A number of whales are scaling back long Bitcoin positions, or have been quietly adding to shorts. Meanwhile, retail traders are jumping in on FOMO. Some bearish traders are now looking at the $80,000 zone as an area where they’ll be buying Bitcoin on a dip back into the range.

Macroeconomic Pressures and Global Market Shifts

Broader macroeconomic factors were another important reason for Bitcoin’s price drop today. Japanese bond yields have skyrocketed in the past few days, with 2-year yields breaching their highest levels since 2008. Many traders are now pricing in the possibility of the BOJ hiking interest rates by December, causing investors to unwind their risk asset positions and flee to the safety of gold. As a high beta asset, BTC tracks these moves all too well, and with risk assets sliding across the board, so does it.

Will Bitcoin Rebound?

Following the initial Bitcoin crash during the early hours of December 1st, 2025, BTC declined further within the downward channel. It touched a daily low of $85,600, which has since become an important support level. On the contrary, the key resistance is now at $87,000. At the moment, Bitcoin’s price is being range-traded between these two levels. A move above the resistance could see the price eyeing the $88,000 level. In the event of a break below the $85,500 support, the next support target is $83,500.

Conclusion

To conclude, today’s Bitcoin crash was triggered by a combination of the DeFi hack, forced liquidations from over-leveraged positions, and a broader macro revaluation. Now the market is finding its direction after the cascading liquidations. If Bitcoin’s support levels hold up alongside a stabilization in macro conditions, we may see a price stabilization or a rebound.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments are highly volatile and risky. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions.