Major cryptocurrencies opened December in the red after Yearn Finance reported a serious issue in its yETH liquidity pool, adding fresh pressure to an already weak market.
Crypto Market Falls at the Start of December
The global crypto market began the month on a downward trend, extending losses seen through late November.
Early Monday trading in Asia saw sharp declines across leading digital assets, signalling renewed market fear.
- Bitcoin (BTC) slipped over 3%, trading close to $87,000.
- Ethereum (ETH) dropped around 5%.
- Major altcoins like SOL, DOGE, and XRP also fell more than 4%, according to market data.
These declines intensified after Yearn Finance issued an alert about an “incident” affecting one of its key pools.
Yearn Finance Confirms yETH Pool Exploit
Yearn Finance announced that an issue had occurred in its yETH liquidity pool, though its V2 and V3 vaults were confirmed safe.
Early investigations and community reports suggested that an attacker used a smart-contract flaw to mint a large amount of yETH in one transaction, fully draining the pool.
- Estimated loss: $9 million
- Stolen ETH: 1,000 ETH, worth around $3 million
- Funds reportedly moved through Tornado Cash
- Hacker’s address still holds around $6 million, according to PeckShield
The yETH token represents a basket of Ethereum-based Liquid Staking Derivatives (LSTs), making the attack especially disruptive for liquidity providers.
Market Pressure Builds After Recent Hacks
This incident came shortly after South Korea’s major exchange Upbit suffered a multi-million-dollar breach, raising concerns about DeFi security and centralized exchange vulnerabilities.
Experts warn that despite large institutional inflows over the past year, the industry’s security infrastructure has not grown at the same pace.
Over $400 Million in Liquidations Hit Traders
The sudden market drop triggered more than $400 million in crypto futures liquidations, mostly impacting long traders who were expecting a recovery.
According to Coinglass data, the sharp decline caught many overleveraged positions off guard, adding more selling pressure across the market.
November Ends With Bitcoin and Ether’s Worst Monthly Performance
November closed with steep losses:
- Bitcoin recorded a 17.5% monthly drop, its worst decline since March.
- Ethereum fell by 22%, marking its weakest month since February.
This came despite a short-lived rebound late in the month when Bitcoin briefly recovered from $80,000 to above $90,000.
ETFs Record Massive Outflows
Institutional demand weakened significantly:
- U.S.-listed Bitcoin ETFs saw $3.48 billion in net outflows in November — the second-largest monthly withdrawal ever recorded.
- Ethereum ETFs posted $1.42 billion in outflows, their worst month so far.
These outflows reflect cooling interest from large investors, further contributing to December’s weak start.
