What Really Caused Crypto Markets to Dump by $140 Billion in Hours?
Total market capitalization is in danger of dropping below $3 trillion following a $140 billion exodus from the digital asset space over the past several hours.
The metric dropped to a three-week low of $3.02 trillion in late trading on Monday, with Bitcoin leading the decline in what was expected to be a volatile week. BTC has lost support at $90,000, shedding almost $5,000 in a couple of hours as it tanked to $85,200, its lowest level since the massive leverage flush on December 2. The asset had yet to recover and was trading just below $86,000 during the Tuesday morning Asian trading session.
Crypto Analysts Weigh In
Analyst ‘NoLimit’ offered another bearish outlook, claiming that the crash was caused by China, which “tightened regulations on domestic Bitcoin mining again,” forcing local miners offline. The same analyst added that the Bank of Japan would crash Bitcoin this week.
Meanwhile, analyst ‘Sykodelic’ blamed it on derivatives markets again, specifically, high open interest. Today, we just had the biggest spike in OI on this move down in six weeks, they said before adding:
“Basically, it is becoming extremely accepted to be bearish with everyone really feeling the pinch of the downtrending market. Its creating the environment where traders are chasing every drop with shorts, and short liquidity building up over and over.”
According to Deribit, there is $2 billion in OI at the $85,000 strike price. Short sellers may hedge by selling spot or futures as the price falls toward their strike, thereby amplifying the downside.
Analyst James Check observed that “Bitcoin market stress is now the highest we’ve seen since the 2022 bear.”
There were around $100 billion in unrealised losses, falling hash rates, 60% of ETF inflows underwater, and treasury stocks trading below net asset values, he explained.
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Meanwhile, analyst ‘Skew’ made their observations about the current state of the market.
$BTC
As for the market there’s a few things to keep an eye on hereFirstly, the bart like price action which seemingly is continuing due to lack of real trading & lack of directional positioning
Secondly, the clear imbalance between supply & demand during these barts (high &… pic.twitter.com/Yok9R87wX8
— Skew Δ (@52kskew) December 15, 2025
US Crypto Legislation Delay
The primary reason for the dump is likely to be the delay in crypto market structure legislation in the United States.
A US Senate Banking Committee spokesperson said on Monday that there will not be a market structure markup this year, delaying the key bipartisan legislation until Congress reconvenes in early 2026.
“The Committee is continuing to negotiate and looks forward to a markup in early 2026,” they explained.
The crypto industry had widely expected this legislation, which grants the CFTC authority over spot markets, to make more progress before the end of the year.