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Bitcoin (BTC) traded at $63,531 at the time of writing after rebounding from a four-month low near $61,300, where a wave of forced liquidations swept through leveraged crypto markets. More than $1.5 billion in positions were liquidated across digital assets over the past 24 hours, contributing to Bitcoin’s largest one-day liquidation event in several months before buyers stepped in near a closely watched long-term support level.
The recovery has provided short-term relief for bulls, but the broader backdrop remains challenging. Record exchange-traded fund (ETF) outflows, growing competition from AI-related investments, and a decline in Bitcoin’s share of the crypto market suggest that investor appetite remains uneven despite the rebound.
The selloff accelerated during Asian trading hours when Bitcoin briefly fell below $62,000 and dipped under its 200-week simple moving average (SMA), a technical level many traders monitor during major corrections.
According to CoinGlass, more than 208,000 traders were liquidated over 24 hours. Bitcoin positions accounted for over $800 million of those losses, while Ether (ETH) liquidations exceeded $386 million.
The scale of the liquidation event suggests that leverage, rather than a single news catalyst, amplified the decline. As prices fell, forced selling from liquidated long positions added further downward pressure, creating a feedback loop that pushed Bitcoin to its lowest level since early February 2026.
The rebound that followed carried several characteristics of an oversold recovery. Bitcoin climbed more than $3,000 from its intraday low and returned to the $64,000 area after the daily relative strength index (RSI) fell below 30, a level often associated with exhausted selling momentum.
While liquidation-driven selling intensified the decline, weakening institutional demand has been a recurring theme throughout the recent downturn.
Data from SoSoValue shows US spot Bitcoin ETFs recorded roughly $1 billion in net outflows this week, extending their longest withdrawal streak since launch. Bloomberg data cited by multiple market reports shows investors have removed $4.4 billion during the current 13-session outflow streak.
ETF flows remain one of the strongest indicators of institutional demand for Bitcoin. Citi analyst Alex Saunders wrote that ETF flows explain roughly 45% of weekly Bitcoin return variation, highlighting their role in short-term Bitcoin price performance.
That trend helps explain why Bitcoin struggled to hold key support levels despite substantial corporate accumulation over the past year. CryptoQuant CEO Ki Young Ju highlighted on X that ETFs and Strategy have collectively absorbed more than 1.2 million BTC since March 2024, yet Bitcoin has returned to the same price range.
His observation suggests the market is facing stronger supply pressure than many investors expected.
This distribution phase feels like a massive change of hands.
Bitcoin investors' average cost basis is around $53K.
Historically, bear markets ended only after the price fell below the realized price. I thought that level would be hard to revisit, given institutional inflows… pic.twitter.com/m678rL6ztl
— Ki Young Ju (@ki_young_ju) June 4, 2026
Bitcoin’s recent weakness has prompted several research companies and market strategists to look beyond crypto-specific catalysts.
Presto Research said many of Bitcoin’s largest drawdowns this year have coincided with strength in gold and AI-related equities. Charles Schwab strategist Jim Ferraioli said Bitcoin’s recent underperformance appears less related to Strategy’s small BTC sale and more to the asset losing momentum relative to other popular trades.
That divergence has become increasingly visible. Over the past month, Bitcoin has fallen more than 16%, while the S&P 500 has continued setting new records.
Bitcoin Drops Over 16% in a Month While S&P 500 Gains 5%
Charles Schwab’s Jim Ferraioli said Bitcoin’s recent underperformance is less about Strategy’s small BTC sale and more about BTC losing its momentum-trade appeal. BTC has fallen more than 16% over the past month, while the… pic.twitter.com/mlh4IwPpkK
— Wu Blockchain (@WuBlockchain) June 4, 2026
Middle East tensions, persistent inflation concerns, and uncertainty around US Federal Reserve policy have also encouraged investors to favor assets perceived as offering stronger earnings visibility or defensive characteristics.
This backdrop helps explain why Bitcoin’s rebound hasn’t yet been accompanied by a meaningful improvement in ETF demand.
One of the more notable developments during the latest selloff has been the decline in Bitcoin dominance.
According to TradingView, BTC dominance dropped to 57.83%, its lowest level since September 2025. At the same time, the altcoin-to-Bitcoin ratio reached a 15-month high, with altcoins outperforming Bitcoin by roughly 31% since May 2026.
Under normal market conditions, traders often expect capital to move toward Bitcoin during periods of heightened uncertainty. The recent decline in dominance suggests some investors are looking elsewhere for returns even as Bitcoin remains under pressure.
The trend doesn’t necessarily signal the start of a broad altcoin cycle. Several alternative cryptocurrencies have also suffered significant losses during the correction. Still, the relative performance gap indicates that Bitcoin is no longer attracting the same share of capital it did earlier in the year.
The recovery from $61,000 has improved short-term sentiment, but several indicators show that risks remain elevated.
Options traders continue buying downside protection, with the $50,000 put option among the most actively traded contracts on Deribit during the selloff.
Long-term holder activity has also become more mixed. Compass Point analyst Ed Engel reported that long-term holders, defined as investors holding Bitcoin for at least 155 days, sold $2.4 billion worth of BTC over a two-day period after remaining largely inactive between February and April.
There are also signs that the market may be approaching a capitulation phase. Bitcoin defended support near its February 2026 lows, reclaimed the 200-week MA, and recovered more than $3,000 from the session bottom. Some traders view that combination as evidence that aggressive sellers may be losing momentum.
Bitcoin defended the $61,000 area during the selloff and reclaimed its 200-week MA, but institutional demand remains weak. Investors have withdrawn $4.4 billion from US spot Bitcoin ETFs during the current 13-session outflow streak, according to Bloomberg data.
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