Why Crypto Markets Crashed on December 1 📉

Major cryptocurrencies including Bitcoin (BTC), Ethereum (ETH) and XRP slid sharply on December 1 — and the trigger wasn’t macroeconomic news but a fresh blow to the DeFi space triggered by a significant Yearn Finance incident.

🔎 What happened

• Early Monday in Asian markets, BTC dropped more than 3%, ETH fell about 5%, and other tokens like XRP, SOL, and DOGE also saw losses above 4%.
• The decline followed Yearn Finance reporting an “incident” in its yETH liquidity pool. An attacker exploited a vulnerability, drained around 1,000 ETH in a single transaction, minted unlimited yETH, and laundered the funds via a mixer.
• The protocol reportedly lost around $9 million in total, shaking confidence across DeFi and staking-related liquidity pools.

💥 Why this triggered a broader market crash

• The exploit sparked cascading liquidations: more than $400 million in leveraged crypto long positions were wiped out, intensifying selling pressure.
• Markets were already fragile. November had been one of the worst months of the year for both BTC and ETH, with significant price drops and deteriorating sentiment.
• Institutional demand weakened as well, with U.S.-based Bitcoin and Ethereum ETFs seeing heavy outflows throughout November, adding to overall market pressure.

🧩 What this means for crypto sentiment

The drop highlights how fragile the market currently is. Even top-tier cryptocurrencies can be affected by exploits in major DeFi protocols. A single security failure can spark fear, sell-offs, and forced liquidations across the entire ecosystem.

It also underscores a broader truth: regardless of positive macro trends, crypto is still highly vulnerable to internal ecosystem risks like smart-contract exploits, liquidity weaknesses, and high leverage.

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If you want to read the full article and all details, check it out here:
👉 https://www.coindesk.com/markets/2025/12/01/bitcoin-ether-xrp-slide-as-december-begins-with-yearn-attack