Bitcoin, Ether, and XRP Drop as December Begins With Market Shock From Yearn Incident

What to Know

• Major cryptocurrencies dropped as December began, extending November’s heavy selling pressure
• A security incident at Yearn Finance’s yETH pool triggered fresh market panic
• Liquidations exceeded $400 million as leveraged long positions were wiped out
• Bitcoin and Ethereum ended November with their worst monthly performance in months
• Spot BTC and ETH ETFs saw billions in outflows, highlighting weakening institutional demand

Crypto Markets Drop as Yearn Finance Incident Shakes Early December Trading

The crypto market began December on a negative note, with Bitcoin (BTC), Ether (ETH), Ripple (XRP), and several other major tokens sliding sharply during the early Asian session. The downturn extended the losses that dominated the last weeks of November, as traders faced new concerns sparked by an incident affecting a key liquidity pool on the DeFi platform Yearn Finance.

Bitcoin fell more than 3%, slipping toward $87,000, while Ether declined roughly 5%. Other widely held tokens, including SOL, DOGE, and XRP, dropped more than 4%, deepening an already fragile market sentiment. The declines followed a month marked by persistent selling pressure, reduced institutional inflows, and increasing anxiety across digital asset markets.

Yearn Finance Incident Triggers Market Panic

The immediate catalyst for this renewed sell-off was an alert from Yearn Finance, one of the oldest and most recognized DeFi protocols, which reported an “incident” involving its yETH liquidity pool. Although Yearn clarified that its V2 and V3 vaults were not affected, the message was enough to trigger a wave of caution and defensive positioning among traders.

Details of the Yearn Exploit and On-Chain Findings

Blockchain security firms later revealed that the protocol suffered a loss of approximately $9 million. According to on-chain data, 1,000 ETH was transferred to Tornado Cash, a mixer commonly used to obscure the movement of stolen funds. The exploiter’s known address still holds around $6 million in tokens. While not the largest hack of the year, the incident added to the unease brewing within a market that has recently been rattled by security breaches.

Security Concerns Grow After Multiple Incidents

The Yearn event came just days after a multi-million-dollar hack at the major Korean exchange Upbit. The back-to-back incidents highlight a recurring contradiction in the digital asset ecosystem: while institutional inflows and valuations have grown dramatically over the past two years, security practices across both centralized and decentralized platforms continue to lag behind. This imbalance exposes the market to sudden shocks that can destabilize prices and trigger cascading liquidations.

Liquidations Exceed $400M as Volatility Spikes

The reaction across futures markets was swift. As volatility surged, more than $400 million in leveraged long positions were wiped out, according to market data. Many traders had positioned themselves for a rebound following late-November stabilization and were caught off guard by the sudden drop. Liquidations of this scale tend to amplify downward momentum, accelerating price declines and creating feedback loops that intensify market drawdowns.

Bitcoin and Ether Close November With Heavy Losses

The weakness seen at the start of December follows what was already a difficult November for traders. Bitcoin ended the month with a 17.5% loss, marking its worst monthly performance since March. This is despite a notable recovery in the final week of November, when BTC bounced from near $80,000 to above $90,000. Ether performed even worse, shedding 22% across the month — its steepest monthly decline since February.

Institutional Demand Weakens as ETFs See Outflows

A major driver behind the bearish pressure has been a sharp downturn in institutional demand. Spot Bitcoin ETFs listed in the United States experienced $3.48 billion in net outflows in November, their second-largest monthly redemption total since launch. Ether ETFs fared even worse, recording $1.42 billion in outflows — the highest on record. These numbers signal that institutional investors significantly reduced exposure during the month, removing a key source of support that the market had relied on earlier this year.

What Traders Are Watching Next

The combination of technical weakness, soft demand, security incidents, and leveraged liquidations has created a challenging environment for crypto as the market transitions into December. The Yearn exploit in particular adds to concerns about DeFi infrastructure reliability. Social media discussions suggest the attacker exploited a minting vulnerability, allowing them to generate large amounts of yETH in a single transaction. This overwhelmed the liquidity pool and enabled the theft of around 1,000 ETH, routed through mixers shortly after the attack.

YETH itself serves as a liquidity pool token tied to Ethereum liquid staking derivatives, making it an important instrument within the DeFi ecosystem. Any instability within such pools often impacts broader market sentiment, as these instruments are widely integrated across protocols.

Overall, while the December decline continues the broader downtrend that characterized November, the latest selling appears less tied to macroeconomic fears and more driven by structural issues within crypto markets — namely weak institutional flows and renewed focus on DeFi vulnerabilities.

Whether the market can stabilize will depend on sentiment throughout the week, the pace of ETF flows, and whether additional security concerns surface. For now, traders are cautiously watching Bitcoin’s ability to hold support near $85,000–$87,000 and Ethereum’s defense of the $2,700–$2,800 range as early markers for December’s direction.