June Crypto Drop: War, Liquidations, or Panic? The Complete Analysis of the Factors Behind the Correction
The second week of June 2025 brought a cold shower to the cryptocurrency market. Between the 10th and 13th, a strong sell-off caused widespread losses, with the total market capitalization falling by about 4% in 24 hours to $3.24 trillion. Bitcoin dropped by more than 5%, and Ether by nearly 10%. But what caused this abrupt correction?
6/13/20254 min read
June Crypto Drop: War, Liquidations, or Panic? The Complete Analysis of the Factors Behind the Correction
The second week of June 2025 brought a cold shower to the cryptocurrency market. Between the 10th and 13th, a strong sell-off caused widespread losses, with the total market capitalization falling by about 4% in 24 hours to $3.24 trillion. Bitcoin dropped by more than 5%, and Ether by nearly 10%. But what caused this abrupt correction?
Several factors were cited, from geopolitical tensions and macroeconomic indicators to actions by large investors and the market's own technical dynamics. In this analysis, we will dissect each of these elements to understand which one played the predominant role in the fall and what it means for the market's future.
The Spark: Geopolitical Tensions and Risk Aversion
The spark that lit the fuse of the correction seems to have come from the international stage.
The Israel-Iran Conflict as an Immediate Trigger
The main cited trigger was the intensification of tensions in the Middle East. News circulating between June 12th and 13th about Israeli attacks on nuclear facilities in Iran drastically increased the fear of an open conflict in the region. The confirmation of airstrikes by the Israeli prime minister raised the risk of retaliation, leading to a classic "risk-off" move. Investors sought safety in assets like gold and oil while dumping volatile assets like cryptocurrencies.
US-China Trade Tension as a Backdrop
Worsening the mood, the then-US president hinted early in the week that trade negotiations with China were "stagnant," threatening new tariffs. This global nervousness added to the Middle East concerns, weighing on market sentiment. Although stock markets showed resilience, the crypto market reacted much more intensely, as is often the case during periods of geopolitical shock.
The Macroeconomic Scenario: A Double-Edged Sword?
The macroeconomic backdrop played an ambiguous role, with good and bad news coexisting.
The (Temporary) Relief of Inflation and Hopes for Rate Cuts
On one hand, positive inflation data from the US brought optimism. The May Consumer Price Index (CPI) came in slightly below expectations (2.4%), fueling hopes that the Federal Reserve could cut interest rates later in 2025. In response, Bitcoin briefly surpassed $110,000, but the euphoria was short-lived.
Signs of a Slowdown and Fiscal Risks Causing Caution
Despite the inflation relief, uncertainties persisted. Concerns about the high US government debt and indicators of cooling economic activity (like a weaker PPI and rising jobless claims) kept investors cautious. This slowdown scenario, while potentially leading to lower interest rates (positive for crypto), also generates fears of a recession. In the final balance, macro news was overshadowed by geopolitics.
The Role of the "Big Players": What Did Institutional Investors Do?
The actions of "whales" and institutions had a mixed effect during the fall.
Selling and Profit-Taking vs. Opportunistic Buying via ETFs
On-chain data showed large wallets moving substantial amounts of BTC to exchanges, signaling intent to sell and take profits. Bitcoin funds and ETFs registered net outflows early in the week. However, at the same time, US spot Bitcoin ETFs accumulated three consecutive days of net inflows, led by BlackRock's fund. Ether ETFs also maintained a positive flow. This indicates that while some big players were selling, others took the dip as a buying opportunity.
An Ambiguous Impact, with the Sell-Side Dominating in the Short Term
In that week's balance, the impression is that selling pressure from profit-takers dominated and contributed to the intensity of the fall. However, institutional interest did not disappear, which can be seen as an underlying sign of resilience.
Ruled-Out Factors: Regulation and Exchange Issues Were Not the Villains
It's important to note that some common factors in market drops were not involved this time.
Stable or Improving Regulatory Environment
There were no major negative regulatory announcements to justify the correction. On the contrary, the environment in 2025 had been showing greater openness from regulators to crypto products, like altcoin ETFs, indicating an improving landscape.
Infrastructure (Exchanges and Stablecoins) Functioning Normally
The market operated without major failures. There were no hacks, insolvencies, or de-pegging of major stablecoins (like USDT and USDC) that could have caused panic. The cause of the drop was external and structural, not an internal failure of the ecosystem.
The Amplifier: How Technical Factors Turned the Drop into a Cascade
If geopolitics was the spark, the market's technical condition was the powder keg.
"Stretched" and Overbought Market After a Strong Rally
The market was coming off a strong rally since the beginning of the year, with Bitcoin setting a new all-time high above $110,000. On-chain indicators showed signs of exuberance and overbought conditions, with many traders positioned optimistically and with leverage. The market was vulnerable to a shock.
The Domino Effect of Mass Liquidations ($1.15 Billion)
The geopolitical news was the push that broke important technical supports. This triggered stop-loss orders and, crucially, a cascade of liquidations of leveraged positions. In 24 hours, over $1.15 billion was liquidated (with $1.06 billion in long positions). This forced selling drastically amplified the fall, creating a "snowball effect."
A "Healthy" Correction Within an Uptrend?
From a technical perspective, some analysts argue the correction was "healthy." It served to "cool off" overbought indicators, and on the weekly chart, the price structure remained within a bull flag pattern. This suggests the long-term uptrend may not have been invalidated.
Final Conclusion: Which Factor Had the Greatest Impact?
The crypto market drop between June 10-13, 2025, was a multifactorial event, but with a clear hierarchy:
Main Catalyst: Geopolitical Shock. The escalation of the Israel-Iran conflict was the immediate trigger that generated risk aversion.
Key Amplifier: Technical Factors. The market was already overbought and highly leveraged. Mass liquidations turned a moderate dip into a sharp correction.
Secondary Factors: The macroeconomic scenario served as a backdrop, while institutional movements played an ambiguous role, modulating the intensity of the fall.
Non-Factors: Regulatory issues and operational problems in exchanges or stablecoins were not the cause.
In summary, the correction was a reaction to an external event, exacerbated by the market's internal conditions. With geopolitical fears subsiding and macro fundamentals still favorable, many analysts remain optimistic that the fall was a healthy technical pause within a structurally bullish market.
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