The cryptocurrency market faced its most significant sell-off in over a year, wiping out $510 billion in total market capitalization and leaving more than half of the top 50 cryptocurrencies in the red.
Market Crash Overview
The market meltdown, termed “Black Monday” by analysts, resulted in over 60% of the top 50 cryptocurrencies losing all their gains from the start of 2024. According to CryptoQuant analyst Binhdangg, the sell-off erased profits for the majority of these top coins, with some even incurring losses.
Top 50 cryptocurrencies, performance. Source: Binhdangg
“After Black Monday, 60% of coins in the top 50 have removed all profit since the beginning of 2024 and even get losses,” Binhdangg noted in an Aug. 6 post on X.
Ether’s Decline
Ether (ETH) was not spared, briefly dipping to a five-month low below $2,200. This psychological mark’s breach could trigger more panic selling and further downside pressure across the market.
Causes of the Sell-Off
The crypto market’s brutal sell-off was driven by a mix of macroeconomic and industry-specific factors. On Aug. 5, the Bank of Japan raised its interest rate from 0% to 0.25%, impacting the United States stock market and Bitcoin prices. Traders who had borrowed Japanese yen at low interest rates to invest in US assets faced sudden adjustments.
In addition, five major market makers sold a total of 130,000 Ether, worth $290 million at current prices, since Aug. 3. This mass sell-off included Wintermute (47,000 ETH), Jump Trading (36,000 ETH), and Flow Traders (3,620 ETH), significantly contributing to Ether’s price decline.
Memecoins Suffer the Most
Memecoins, known for their lack of intrinsic value and reliance on social media hype, experienced the steepest losses. Solana-based memecoin Dogwifhat (WIF) plummeted over 41% during the past week, trading at $1.38 as of 8:37 am UTC on Aug. 6. Similarly, Pepe (PEPE) fell over 34% to $0.057781, marking a 53% drop from its all-time high in May.
WIF/USD, one-week chart. Source: Cointelegraph
The sharp declines in these memecoins underscore their vulnerability during market corrections, driven primarily by retail investor sentiment and social media trends.
Conclusion
The $510 billion crypto sell-off has significantly impacted the market, erasing gains for many top cryptocurrencies and highlighting the volatility and risks inherent in the sector. With major factors like interest rate changes and market maker activities playing a crucial role, the crypto market’s path to recovery remains uncertain.
