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Bitcoin fell sharply in Asian trading on Monday, kicking off the new month with renewed volatility after a serious incident at DeFi protocol Yearn Finance ignited widespread concerns over market liquidity.
By 01:07 ET (06:07 GMT), Bitcoin was down 5.3% at $86,075.6, after touching an intraday low of $85,638.3. The world’s largest cryptocurrency slumped more than 16% in November, marking one of its weakest monthly performances this year.
Yearn Finance Liquidity Shock Sends Ripple Through Crypto Markets
The downturn accelerated after Yearn Finance disclosed it was investigating an “incident” involving its yETH liquidity pool.
Early reports indicated that a flaw allowed an attacker to mint an extremely large quantity of yETH tokens, effectively flooding the pool with artificial supply.
In practical terms, the exploit enabled the creation of tokens “out of thin air,” severely undermining confidence in the pool’s underlying assets.
The shock triggered a rapid exit from correlated DeFi environments and spilled over into broader crypto markets — Bitcoin included.
Fed Rate Cut Bets Offer Support, But Not Enough
Bitcoin’s slide came despite a generally supportive macro backdrop.
Markets significantly increased bets on a 25 bps Fed rate cut in December, driven by signs of softening U.S. economic growth and cooling inflation.
According to CME FedWatch:
- 87% probability of a cut at the December 9–10 meeting
(up from ~40% a week earlier)
Rate-cut optimism helped steady risk assets late last month, but the Yearn exploit overshadowed those tailwinds.
Fed Chair Speculation Adds to Uncertainty
Adding to market nerves, U.S. President Donald Trump said over the weekend he already knows whom he will nominate as the next Federal Reserve Chair, though he did not name the candidate.
Speculation has intensified around figures such as:
- Kevin Hassett — seen as notably dovish
- Other potential policy-shift candidates, including former and current Fed officials
Investors worry that changing leadership at a critical policy juncture might introduce new volatility across risk-sensitive markets — including crypto.
Altcoins Hit Hard: Ether Drops 6%, XRP Falls Over 7%
Panic selling spread quickly across the altcoin space:
- Ethereum (ETH): ↓ 5.7% to $2,826.92
- XRP: ↓ 7.3% to $2.03
- Solana: ↓ 7.5%
- Cardano: ↓ 8%
- Polygon: ↓ 6.5%
- Dogecoin: ↓ 8%
- $TRUMP: ↓ 5%
