Investing.com — Bitcoin experienced a sharp decline during Asian trading hours on Monday as the new month began with fresh turmoil in the cryptocurrency market, stemming from an incident on the Yearn Finance DeFi platform that reignited liquidity concerns.
The world’s largest cryptocurrency was last seen trading 5.3% lower at $86,075.6 as of 08:07 Moscow time.
Bitcoin had earlier touched a low of $85,638.3 over the past 24 hours. For the month of November, it registered a drop exceeding 16%.
The sell-off was triggered after Yearn Finance announced it was investigating an “incident” within its yETH liquidity pool. Reports indicated that a bug enabled an attacker to mint an exceptionally large supply of yETH tokens, effectively flooding the pool with invalid supply.
To put it simply, the exploit allowed an entity to generate tokens from thin air, undermining confidence in the pool’s underlying assets and prompting traders to exit in haste.
The glitch immediately introduced volatility into correlated assets, leading to a significant plunge for Bitcoin and other digital currencies.
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Fed Rate Cut Bets Remain in Focus
This dip occurred right after Bitcoin concluded November with a steep monthly fall. The downward pressure persists despite improved sentiment regarding US monetary policy, which had supported risk assets toward the end of last month.
Expectations for a Federal Reserve interest rate cut in December have notably strengthened over the past week, fueled by weaker US growth figures and signs that inflationary pressures are easing.
Traders are currently pricing in an 87% chance of a 25-basis-point reduction at the December 9–10 meeting, up from odds around 40% just a week prior. The prospect of looser monetary conditions initially helped stabilize crypto markets, but the Yearn Finance event overshadowed this optimism.
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