Today’s steep drop in the cryptocurrency market has seen major coins including Bitcoin, ETH, BNB, SOL, XRP, and DOGE, among others, retreat. Notably, the abrupt shift in attitude from earlier this week has spurred conversations about the possible cause of the selloff in the cryptocurrency market. To put things in perspective, the market was maintaining an optimistic view on cryptocurrencies and was expecting a new high for the price of Bitcoin in the near future.
Causes of The Latest Decline in The Crypto Market
The latest spikes in cryptocurrency prices this week demonstrate the bullish mentality that has been prevalent in the industry. Nevertheless, despite the week’s good trend, it seems that attitude has shifted by Friday, leading to a significant selloff in the cryptocurrency market.
In the meanwhile, the market panic begins shortly after the Labor Department releases the U.S. Job statistics on Friday, June 7. According to the most recent labor market report, the United States added 272,000 jobs in May, which is a sharp increase over both the prior month’s employment and market expectations.
The strong non-farm payroll report has affected investor mood even as the unemployment rate rose to 4% last month from 3.9% in April. To put things in perspective, the positive non-farm payroll report has dashed expectations of a U.S. Federal Reserve interest rate cut, which has caused anxiety in the financial industry as a whole, not to mention the cryptocurrency market.
Furthermore, the market as a whole is becoming concerned in light of GameStop’s (GME) recent plan to sell $175 million in shares, the top meme stock. On Friday, June 7, the GME shares closed over 40% lower. After that, there has also been a significant drop in the value of popular meme coins like GME, DOGE, SHIB, and others.
What Comes Next?
Massive liquidations have resulted from the current volatility in the bitcoin market. Data from CoinGlass shows that in the last day alone, 147,330 dealers were liquidated, totaling $411.25 million in losses.
Interestingly, the largest single liquidation ever happened on OKX and involved a $5.20 million ETH-USD-SWAP. The current wave of liquidations draws attention to the turbulence in the market and the risks that traders face in the face of sharp price swings.
Amidst concerns about rate cuts, the value of the global cryptocurrency market fell by 3.47% to $2.55 trillion. The price of Ethereum dropped 3.6% to $3,681.7, while the price of Bitcoin declined 2.81% to $69,275.03. Concurrently, the price of XRP dropped 5% to $0.4998 and the price of Solana fell 6% to $162.11.
Even still, some investors are still upbeat about a possible recovery, as evidenced by the large inflows noted by the U.S. Spot Bitcoin ETF. A net inflow of $1.8 billion has been seen into the U.S. Spot Bitcoin ETFs this week, indicating institutional interest in the flagship cryptocurrency.
