Bitcoin and ether experienced sharp declines on Monday as cryptocurrency markets resumed their recent sell-off.
Bitcoin was last trading at approximately $85,894.03 at 4:19 p.m. ET, marking a 6% drop.
Ether fell 8.4%, hitting $2,776.39.
Other digital assets also slid, with Solana losing over 9% and falling below $125, while multiple tokens ended the day in the red.
Pressure from China and Market Sentiment
In Asia, the People’s Bank of China issued a statement on Saturday warning against illegal activities related to digital currencies.
The announcement put additional pressure on Hong Kong-listed shares of digital assets-related companies, which retreated on Monday.
The broader cryptocurrency slide coincides with a wider risk-off sentiment at the start of the month.
Ben Emons, founder and CIO of Fedwatch Advisors, noted that investors remain “nervous” after the recent bitcoin sell-off.
He attributed Monday’s decline partly to a $400 million exchange liquidation.
High Leverage Driving Volatility
Speaking on CNBC’s “Squawk Box Europe,” Emons highlighted the high leverage on some bitcoin exchanges, reaching up to 200x.
With roughly $787 billion in perpetual crypto futures leverage versus $135 billion in ETFs, he warned, “There is still a lot of leverage in bitcoin out there. We can expect some more of these liquidations if bitcoin prices don’t get off the lows from here.”
Monday’s drop follows October’s sharp sell-off, which also influenced stock markets.
Emons said bitcoin has shown stronger correlations with indexes like the Nasdaq recently.
Retail Investors and Macroeconomic Concerns
Emons emphasized that retail investors predominantly drive these movements, making the market more reactive than institutional trading.
He pointed out the decentralized and opaque nature of crypto exchanges adds to this volatility.
Macroeconomic uncertainties, including speculation over a possible U.S. rate cut, continue to weigh on investors.
Concerns about overvalued artificial intelligence-related stocks also contributed to November’s market turbulence.
Indicators of Further Weakness
Crypto data suggest more short-term weakness may be ahead.
Perpetual futures open interest has decreased, indicating reduced speculative positions, according to Zach Pandl, head of research at Grayscale.
Lower trading volumes on both centralized and decentralized exchanges suggest subdued risk appetite.
Investors remain cautious as the cryptocurrency market navigates a volatile period.
