In the past 24 hours, the crypto market witnessed $1.76 billion in liquidations. Bitcoin [BTC] accounted for $810.64 million among this figure, with $734.07 being long liquidations.
Tuesday, the 2nd of June, saw the largest liquidation numbers since the market crash on the 5th of February. On that day, $1.844 billion in long positions alone were liquidated across the market.
Crypto was reeling, and the sentiment was in the “extreme fear” territory once again. AMBCrypto reported that Bitcoin whales and sharks were dumping their holdings. It did not help sentiment that the U.S. stock market was seeing a multi-week rally into historic highs.
Heavy liquidations are only one side of the story
Short-term holders who bought when Bitcoin rallied beyond $80k have been caught off guard recently. A month ago, it appeared possible (but unlikely) that it could rally toward $90k, given the short-term momentum. However, the sentiment quickly shifted.
During the relief rally, on-chain metrics indicated a lack of demand, and these bearish predictions were confirmed.
Farside Investors’ data showed that spot Bitcoin ETF flows have been negative since the 15th of May. A cumulative $3.963 billion in ETF outflows in just over two weeks was recorded, with a streak of negative flows highlighting the bearish market sentiment.
Short-term holder capitulation puts extra pressure on BTC
A crypto analyst noted that traders moved 53.8k Bitcoin, all at a loss, into exchanges within 24 hours. This marked the most lopsided short‑term holder transfer of the year. The fact that every coin was sold at a loss shows a fear‑driven exit by buyers who entered near the local highs above $80K.
The positive side to the capitulation was that this kind of event tends to mark a local price bottom. The logic is that weak hands get flushed out, and only high-conviction holders are left standing.
Seller exhaustion can help the market discover a bottom, though not every capitulation guarantees one. Therefore, investors should remain cautious of further losses, especially if inflows to exchanges and outflows from ETFs remain unchanged.
Final Summary
- The liquidation and spot ETF flow figures were remarkable and helped explain the depth of the selling pressure.
- Liquidations put downward pressure on the market, forcing panic among short-term holders and weak hands, driving more losses and greater liquidations.