Bitcoin Crashes Below $61K as Strategy Sells, Hedge Funds Flee

Bitcoin fell 7.4% to $60,855.98 on June 06, extending a brutal month-long decline of 20.6%. The crash accelerated after Strategy, one of the world’s largest Bitcoin holders, sold 32 BTC on Monday and hedge funds cut spot Bitcoin ETF holdings by 39% in Q1. Over $635 billion in liquidations have swept the crypto market, forcing traders out of positions as prices plunged. This matters to investors because institutional selling is eroding the structural support that has propped up Bitcoin since January 2024.

Strategy’s Leverage Crumbles Under Market Pressure

Strategy sold 32 BTC on Monday, a small fraction of its 843,706 BTC holdings, but enough to rattle markets. The company also sold $128 million in shares, and its stock fell 12.8% to a two-month low of $126. Grayscale’s head of research, Zach Pandl, warned that Strategy’s leveraged business model is under stress. If Strategy raises its dividend on its preferred equity instrument (STRC) to compensate investors, it could force more Bitcoin sales in a negative feedback loop.

Hedge Funds Exit as ETF Outflows Hit Record Levels

Hedge funds reduced their exposure to U.S. spot Bitcoin ETFs by 39% in Q1 as Bitcoin prices fell 22%. Brokerages also cut holdings significantly. ETF outflows reached $1.42 billion for the week ending May 29, the third-worst weekly result in history. Over the preceding three weeks, total outflows exceeded $4.21 billion. Bitcoin open interest fell roughly 25% over four days to $23.2 billion, the lowest level since early April.

Liquidations Cascade as Traders Forced Out

More than $635 billion in liquidations have occurred across the crypto industry in recent weeks. Over 50% of all Bitcoin in circulation is now held at an unrealized loss. The sharp selloff forced many traders out of positions as prices rapidly declined. Bitcoin briefly fell below $61,500 on Thursday, extending losses that began in late May. Meyka rates Bitcoin a C+ with a 12-month target of $97,867, suggesting limited downside from current levels despite near-term volatility.

Analyst Split on Recovery Prospects

Standard Chartered’s Geoffrey Kendrick maintained his forecast that Bitcoin will reach $100,000 by year-end, despite the sharp decline. However, he outlined three scenarios that could push Bitcoin to new lows: continued ETF outflows, a hawkish surprise from the Federal Reserve in June or July, or Bitcoin dominance breaking below 52-54%. Bitcoin’s market cap stands at $1.33 trillion, well ahead of Ethereum at $233 billion. The market remains divided over whether Bitcoin is approaching a bottom or facing further downside.

Final Thoughts

Bitcoin’s crash reflects institutional panic, not a fundamental flaw. With Meyka rating BTC a C+ and Standard Chartered targeting $100,000 by year-end, the risk-reward is mixed. Investors should watch ETF flows and Federal Reserve signals closely.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.