Bitcoin has experienced a dramatic collapse, crashing below $62,000 after a three-day selloff that erased months of gains and triggered roughly $1.8 billion in liquidations. According to CoinDesk, the crash was triggered by a 32-coin sale by Strategy, the Michael Saylor-led firm that is the largest corporate holder of Bitcoin, for about $2.5 million to help fund dividends on its preferred stock. By June 4, Bitcoin had fallen to $61,655, its lowest level in months and more than 50% below the October 2025 all-time high near $126,200. The selloff has wiped out roughly $1.8 billion in leveraged positions, flushed more than 272,000 traders, and dragged Bitcoin below Strategy's average purchase price for the first time since late 2023. Long positions, the bets on prices rising, made up nearly nine-tenths of the damage, with roughly $1.57 billion of the liquidations being long positions versus only about $215.7 million in shorts.
The crash was preceded by dangerously high leverage levels that created conditions for a cascade. Bitcoin's futures open interest leverage ratio had climbed to 2.63% on June 2, with the perpetual-futures version reaching 2.48% — both the highest readings since October 6, 2025. According to CoinDesk, funding rates were running hot, meaning traders were paying a premium to hold long positions, a classic sign that bullish bets had become crowded and one-directional. Roughly $394 million in leveraged positions were force-closed in a single hour on June 2, with total liquidations reaching about $1.02 billion over the next 24 hours. Spot Bitcoin moving onto exchanges, often a precursor to selling, spiked sharply with total exchange inflows reaching about 58,617 Bitcoin — the highest since April 14 and higher than the roughly 46,527 Bitcoin that flowed in just before the October 2025 Black Friday crash.
The catalyst that amplified an already deteriorating market picture was Strategy's disclosure that it sold 32 BTC in late May to fund preferred dividend payments, according to The Block. Strategy (MSTR) has long been treated by markets as a structural Bitcoin buyer, and the "never sell" narrative attached to Michael Saylor's firm had become load-bearing for sentiment across the institutional investor base. The sale itself did not crash the market, but the symbolism was critical — breaking a psychological anchor that had served as structural support for institutional sentiment. The sequence matters here: the sale itself did not crash the market, but the sale dented sentiment, sentiment nudged the price down toward the first cluster of leveraged long liquidation points, and then the leverage did the rest. The drop pushed Bitcoin below Strategy's average purchase price for the first time since late 2023, deepening the very sentiment problem that Strategy's small sale had started.
The institutional selling has intensified significantly, with U.S. spot bitcoin exchange-traded funds recording $519.2 million in net outflows on Tuesday, extending their negative flow streak to 12 consecutive days according to SoSoValue data. According to The Block, U.S. spot Bitcoin ETFs have now recorded outflows across three consecutive weeks, with cumulative redemptions over that stretch reaching $4.21 billion — the largest institutional de-risking streak of 2026, according to Glassnode. The ETF cost basis near $83,000 — the aggregate break-even level for spot ETF holders — has also emerged as a hard ceiling, with Bitcoin rejected almost precisely at that level during the recent bounce. ETF outflows were the steadiest pressure, with spot Bitcoin ETFs entering an extended consecutive-selloff streak that reached 11 to 12 days, the longest run since the products launched, with total withdrawals of roughly $3.45 billion.
Prediction markets have turned sharply bearish, with traders pricing a roughly two-thirds chance that Bitcoin hits $55,000 or lower before 2027 on Polymarket. According to CoinDesk, traders priced a 72% chance of a drop below $65,000 in 2026, with the same market showing meaningful odds, around half, of a fall to $50,000, with smaller but non-trivial odds assigned to $45,000 and even $40,000. CryptoQuant's head of research Julio Moreno argued the correction was about Bitcoin demand contracting, with overall demand for Bitcoin shrinking at a monthly pace of about 232,000 Bitcoin. The analyst commentary matched the bearish tilt, with CryptoQuant saying a bear market has persisted since November 2025 and warning that bottoms take months to form. However, the same prediction markets still showed a slight majority assigning odds to Bitcoin reclaiming $100,000 by year-end, a reminder that even bearish crowds were not writing off a recovery entirely.
