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Bitcoin (BTC) fell nearly 8% from its all-time peak on May 22, close to $112,000, concluding a 50% rise over 45 days that commenced on April 7, when BTC hit its yearly low at $74,441.20.
As per the June 2 “Bitfinex Alpha” report, a Court of Appeal ruling reinstating contested US import tariffs caused 30-year Treasury yields to exceed 5% for the first time since 2009, prompting widespread risk-off behavior.
Foreshadowing turbulence
Spot Bitcoin exchange-traded funds (ETFs) underscored this trend. In the initial four weeks of May, investors increased their Bitcoin exposure by $6.2 billion through these investment vehicles while withdrawing $2.7 billion from gold ETFs, according to Bloomberg Intelligence.
Nonetheless, BlackRock’s IBIT experienced its largest daily outflow on record, losing nearly $431 million on May 30, according to Farside Investors’ data. The total outflows on that day exceeded $616 million, marking the highest level since February 26.
The report indicated that realized gains accelerated in the previous week, with the Relative Unrealised Profit indicator surpassing its plus-two-standard-deviation threshold.
Only 16% of Bitcoin’s trading history has seen the gauge reach such levels. Previous instances coincided with brief surges in volatility as holders realized profits.
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Increased profitability heightens sell pressure, compelling spot demand to absorb redistributed coins and sustain the upward trend.
Correction cooled overheating derivatives
Simultaneously, perpetual futures open interest surged during Bitcoin’s all-time-high breakout, and now contracts are unwinding as leveraged longs are liquidated.
Options open interest reached a peak of $49.4 billion, approximately $6 billion above January’s high, before the May 29 expiry reduced the figure to around $39 billion.
The report attributed the increase to growing institutional involvement, noting that substantial derivatives positions can amplify price fluctuations when macro liquidity tightens.
The report concluded that the pullback eliminated excess leverage, aligned supply with organic demand, and reset funding conditions across futures and options, creating a more favorable environment for upward movement.
However, on-chain metrics indicate potential turbulence in the short term, as Bitcoin trades just 6.5% below its all-time high.
The post Bitcoin’s 8% correction flushed leverage but set stage for short term turbulence appeared first on CryptoSlate.
