$1.5 Billion in Crypto Assets Liquidated, Bitcoin Falls Below $66,000 Mark. What Is the Reason?

TradingKey - On June 2, Eastern Time, the cryptocurrency market suffered its most severe wave of concentrated liquidations so far this year. Bitcoin ( BTC) fell below the $70,000 psychological support level for the first time since April 2026, plunging through the $69,000, $68,000, $67,000, and $66,000 marks to hit an intraday low of $65,978—a drop of more than 14% from the peak of $77,799 seen two trading days ago.

[Bitcoin plummeted nearly 6.4% in 24 hours, Google Finance]

As of press time, Bitcoin was trading at $65,978, down nearly 7% over 24 hours. According to data from CoinGlass, 263,429 traders were liquidated globally in the past 24 hours, with total liquidations reaching $1.624 billion. The largest single liquidation occurred on Hyperliquid for BTC-USD, valued at $27.4927 million.

[Global liquidation data, source: CoinGlass ]

Approximately $680 million in long positions were liquidated in Bitcoin alone.

Reasons for the Bitcoin plunge

Previously, the world's largest corporate holder of Bitcoin Strategy (formerly MicroStrategy) announced another reduction in its holdings. According to disclosures, Strategy sold 32 Bitcoins on June 1, cashing out approximately $2.5 million at an average price of about $77,135 per coin.

[Strategy reduces Bitcoin holdings, Source: Strategy ]

Although the amount is modest, the blow to the crypto market is significant. For years, the company's founder, Michael Saylor, has repeatedly instilled an investor creed of never selling.

Previously, CEO Phong Le explicitly stated during an earnings call: 'When selling Bitcoin is beneficial to the company, we will sell.' He also noted that the company's objective has shifted from growing the total number of Bitcoins to growing the amount of Bitcoin per share.

The head of derivatives trading at FalconX explicitly stated that if Bitcoin's daily or weekly closing price is confirmed to fall below $70,000, it would mark a structural shift in the market, rather than just a reaction to short-term news events.

Bitcoin ETFs hit by record $3.5 billion sell-off

Spot Bitcoin ETFs are currently experiencing their longest-ever streak of consecutive net outflows.

[Bitcoin records multi-day net outflows, Source: CoinGlass]

According to data compiled by Bloomberg, U.S. spot Bitcoin ETFs have recorded net outflows for 11 consecutive trading days, with approximately $3.5 billion withdrawn during this period. Total net inflows for the full year of 2026 have officially turned negative, as institutional holdings continue to exert pressure on the market.

The structure of crypto derivatives has deteriorated in tandem. Bitcoin open interest dropped from roughly $42 billion to $28.4 billion, and perpetual contract funding rates have turned negative across the board. This indicates that trader positioning has fully shifted from bullish to bearish, establishing a narrative framework for further price declines.

Dual Pressures from Macro and Geopolitical Factors

Newly appointed Fed Chair Warsh’s hawkish stance is translating into substantial liquidity pressure. Ahead of the June FOMC meeting, the market widely expects rates to remain unchanged; however, CME FedWatch shows the probability of a July rate hike has risen to approximately 6.3%, with a rate cut appearing nearly hopeless, prompting institutions to engage in early de-risking.

[Market pricing for a July Fed rate hike rises to 6.3%, Source: FedWatch]

Meanwhile, Iran’s unilateral suspension of negotiations and persistent geopolitical tail risks continue to suppress the pricing elasticity of all risk assets, with crypto assets bearing the initial brunt in a risk-off environment.

In contrast to the crypto industry, the three major U.S. stock indices have repeatedly hit record highs, with the S&P 500 surmounting 7,600 for the first time on June 2, while the Nasdaq simultaneously reached a new all-time high.

Capital is rotating on a large scale from Bitcoin and Ethereum toward thematic U.S. equity assets such as AI semiconductors. Given the complete decoupling of record-high U.S. stocks from the crypto market, if this divergence continues to widen, it will be extremely difficult for the crypto market to rebound on its own momentum in the short term.

Technical indicators

The 200-day moving average sits in the $65,000 to $67,000 range. With the current price hovering near this long-term trend support, a break below it would technically open the door to levels below $60,000.

Market sentiment has bottomed out. The Fear and Greed Index plummeted to 11 (Extreme Fear), down 12 points in a single day from yesterday's reading of 23, signaling that market sentiment has reached a freezing point.

Summary

The essence of this crash is a cascading deleveraging storm triggered by an excessive accumulation of long leverage, the collapse of "never sell" convictions, massive institutional ETF outflows, and the combined impact of macro-tightening expectations and geopolitical risks.

While $1.78 billion vanished instantly, the market is undergoing a profound reshaping of asset positioning; against the backdrop of global capital flooding into the AI sector, Bitcoin's "digital gold" narrative is facing an unprecedented test.