The Big Friday Crypto Selloff, that occurred on June 7, 2024, resulted in Bitcoin’s price dropping below $70,000.Â
The sudden BTC drop had a ripple effect on other cryptocurrencies like DOGE, Ripple, and Ethereum as well, which went downward and experienced significant liquidations and price fluctuations. The steep and sudden change in cryptocurrencies was a reminder of the volatility and potential price swings of the crypto market.
The sudden price swings in Bitcoin and other altcoins also had an impact on various crypto-related industries which included crypto trading and investment firms, crypto exchanges, wallet providers, game token centers, and various other businesses.
Nevertheless, even after the market corrections that resulted in price downfall, several market experts have faith that a fresh rebound is just around the corner.
What caused the sudden downfall of the Market?
The events that triggered the drop in cryptocurrency prices on Friday stemmed from a combination of factors that worked together to form a chain reaction recipe for market crash.Â
The leading factors resulting in the crash were:
1. The U.S. Employment Report
A U.S. employment report had recently revealed that there was an increase of 272,000 jobs in May this year. This unanticipated growth adjusted the expectations regarding an interest rate cut by the Federal Reserve resulting in a surge in interest rates and strengthening of the U.S. Dollar. Therefore the rising interest rates combined with a powerful dollar bear-ed down on cryptocurrency prices amongst other assets.
Essentially, the employment data was seen as a negative surprise by investors who expected a much weaker report that would increase the chances of a rate cut. This led to disappointment for those hoping for a more accommodative monetary policy, which is typically seen as beneficial for high-risk investments like cryptocurrencies.
 2. GameStop Shares
The performance of GameStop’s shares significantly influenced the crypto market. GameStop’s share price saw significant changes, dropping 25% in pre-market trading, followed by a surge when the market opened. This unpredictability was attributed to the return of Roaring Kitty, a popular trader who had previously caused the stock price to increase by more than 800%.
The fluctuation in GameStop’s stock prices caused a domino effect on the crypto market. The sudden price swings in GameStop’s shares led to increased market activity and investor unease, resulting in substantial liquidations and price fluctuations in cryptocurrencies like Bitcoin. Additionally, the excitement surrounding GameStop stocks led to the launch of several meme coins inspired by GameStop, AMC, and Roaring Kitty. This activity contributed to the increase in speculation and market instability in the crypto space.
3. Negative Sentiments stop BTC’s all-time high
Bitcoin encountered significant resistance at $72,000, which prevented it from breaking through and reaching all-time highs. This resistance was more likely due to market sentiment, investors becoming more cautious and selling their positions, as well as technical analysis playing a massive role in the decline.
The decline in Bitcoin’s price was pretty significant, with a 2.5% drop over the previous 24 hours. This potentially had more to do with selling pressure and resistance. The price decline had a ripple effect across the market, with many altcoins experiencing substantial losses.Â
Market Impact
The big selloff in the crypto market, specifically the drop in Bitcoin’s price below $70k, impacted the market negatively.Â
Impact on Altcoins
The selloff led to a decline in the prices of several altcoins, with some experiencing double-digit percentage losses:
- Ethereum (ETH): Ethereum fell by 4% during the selloff, which is a pretty modest decline compared to other altcoins. However, this still represents a loss for investors who held onto their ETH position.
- Solana (SOL): Solana was one of the hardest-hit altcoins, falling by 10% during the selloff. This decline was massive as Solana has been one of the most popular and highly valued altcoins in recent months.
- EOS: Much like Solana, EOS also fell by 10%, marking a significant drop for a cryptocurrency that has a historical reputation for stability.
- Dogecoin (DOGE): The decline for Dogecoin is quite notable since it has been a popular meme coin in recent months, The altcoin fell by 8% during the selloff, which is a significant drop.
Liquidations
The selloff resulted in over $450 million in liquidations, the largest amount since the mid-April market washout. These liquidations are important as they show a large amount of selling activity in the crypto market that can have several negative effects on the market, including:
- Price impact: The selling of assets could potentially affect the prices of cryptocurrencies. In this case, the liquidations led to Bitcoin’s price drop from $72,000 to $69,999.
- Market sentiment: The sudden and large-scale liquidations could potentially lead to a decline in market sentiment, as investor confidence decreased making them more hesitant to engage in riskier investments. This could result in a broader market downturn.
- Market dominance: The liquidations could also affect Bitcoin’s dominance in the market. As the largest cryptocurrency by market capitalization, Bitcoin’s price decline impacts its market dominance, potentially creating a chance for other altcoins to gain more market shares.
ETF Inflows
The market dynamics were affected by the selloff causing a decrease in liquidity and market depth. This has made it more challenging for investors to trade cryptocurrencies leading to a reduction in ETF inflows. Investors are showing some caution and are becoming less inclined to invest in cryptocurrencies. The noticeable drop in ETF inflows is significant with a decrease of more than 50% compared to the month.
Impact On the Crypto Firms
The crypto selloff had several implications for the market and investors are finding it harder to forecast cryptocurrency’s future worth. A decline in investment can impact economic growth by causing a decline in market confidence. Apart from that, downbeat perceptions about the market can also negatively affect different companies and services within the crypto ecosystem.
For example, an investor, who is a crypto casino player, will be impacted by the selloff and see the value of their cryptocurrency holdings decline. Not only does this reduce their willingness to invest in crypto services or products, but their unwillingness to use a service will impact the usage of their crypto wallet provider. This could potentially mean a decline in revenue for the wallet provider.Â
This also has a ripple effect on the best crypto casino the investor uses. The crypto casino relies on the wallet provider to manage the player’s crypto holdings, if the investor is no longer confident in the market, they may be less likely to use their cryptocurrency at a casino, impacting the business’s viability and revenue streams. This highlights how negative sentiment can trickle down and impact businesses in the crypto ecosystem.
Conclusion
The big Friday crypto selloff on June 7th is a reminder of the volatility and uncertainty of the crypto market. It just goes to show the significance of market sentiment and regulatory certainty and how they can influence the worth of cryptocurrencies. This trigger saw Bitcoin drop below $70,000 due to the U.S. employment report and the subsequent increase in interest rates, which impacted the value of several altcoins, causing significant losses and uncertainty for investors.
