Crypto Prices Slide as Liquidations Compound Market Shake-up

Bitcoin slipped 3% to almost $100,000 while Ethereum fell 8%. XRP declined by about 5%.

According to the analytics provider CoinGlass, the mini-sell-off triggered close to $1 billion in liquidations, with investors holding long positions bearing the brunt of the decline, losing close to $888 million as exchanges automatically sold collateral posted to cover losing leveraged positions. 

Those holding short positions – who would benefit from a drop in asset prices – received $99 million in the same period. 

Crypto has been enjoying a renaissance since November as the Trump administration expressed support for the future role of digital assets in the world’s largest economy and as institutional investors warmed to the prospect of reassuring regulation and the availability of crypto investment products. 

Bitcoin’s repeated shattering of its all-time-high has also helped to create an environment for traders to occasionally take profits on news of crypto-specific events and wider market drivers such as economic data.

Circle IPO

News that Circle, the issuer of the USDC stablecoin, raised nearly $1.1 billion in its IPO (initial public offering) absorbed significant attention on 5 June. The stock jumped 168% amid frenzied trading that provided investors with an option to gain alternative exposure to the crypto sector versus owning coins directly.

As institutional players and retail traders scrambled to get a piece of the action, capital may have rotated out of higher-volatility digital assets like Bitcoin, Ethereum, and XRP in favor of Circle’s newly listed stock, offering a reminder that enthusiasm in one corner of the crypto world will not necessarily translate into gains across the board.

Jobs data

The several hours of crypto asset selling also came amid a busy week for employment data releases, the type of which often impact markets and investor sentiment. The data painted a mixed picture of the US economy, with the ADP private sector report indicating only 37,000 jobs added in May in the US, far below expectations, while weekly jobless claims rose by 8,000 to a 7-month high. 

However, the weak labor data had little effect on equity markets and is unlikely to be the main driver behind the crypto pullback. The main US jobs report on Friday 6 may be a more significant event across financial markets.

Trump-Musk public dispute

Assets dropped while Donald Trump and Elon Musk traded insults over social media, widening the recent rift between the US President and his former adviser (and also his top election campaign donor). While there is no evident link between the attention-seeking spat and a decline in asset prices—except for the stock of companies owned or managed by Mr Musk, or perhaps a sense that part of Trump’s power base was undermined—crypto does have a reputation for volatility and can be significantly fueled by sentiment. 

Slight recovery

As of Friday morning trading, however, BTC, ETH and XRP recovered slightly, posting modest gains of over 1%, hinting at a potential rebound and showing that the worst may have yet passed.