Bitcoin took a major hit on Monday, dropping over 5% and briefly falling below $86,000. This sharp decline wiped out the gains made last week and dragged the total value of the entire crypto market back under $3 trillion. The sudden selloff shows that crypto investors are still very sensitive to global economic changes—especially when it comes to interest rates and central bank decisions.

The drop wasn’t limited to Bitcoin. Other big cryptocurrencies also fell hard. Ethereum (Ether) dropped 5.56% to around $2,840. Altcoins like Solana, XRP, and Binance Coin (BNB) lost between 5% and 7%. The selloff caused around $646 million worth of crypto positions to be liquidated in just 24 hours. Most of these losses came from traders who were betting that prices would go up. This wave of liquidations only made prices fall faster.

Several things triggered this panic in the crypto market. One big factor was rising bond yields in Japan, which signaled that the Bank of Japan might raise interest rates soon. This made the Japanese yen stronger and forced many investors to pull out of risky investments like crypto. On top of that, a $9 million hack on Yearn Finance shook confidence among both retail and institutional traders.

There was more pressure from Asia as well. The People’s Bank of China issued a warning over the weekend about illegal activity involving digital currencies. Meanwhile, uncertainty in the U.S. about future interest rate hikes and concerns over high valuations in tech and AI stocks added to the nervous mood.

December started off with caution, as more investors shifted to safer options due to global economic worries. Bitcoin has already had a wild ride in recent weeks—some of its biggest price swings since the major crash in 2021. With this new drop, some experts believe Bitcoin might fall further and test the $80,000 level before stabilizing again.

Right now, traders are closely watching signals from the Bank of Japan and the U.S. Federal Reserve. Their next moves could decide whether the crypto market bounces back or continues to slide further.