Bitcoin failed to meet bullish expectations and has decisively lost the local high of $82,500 reached in early May. The sharpest leg down came on Tuesday, when BTC fell more than 7% in 24 hours and briefly traded below $66,000. At the moment of writing, bitcoin trades at around $67,140.
The latest sell-off coincided with fading hopes for a rapid resolution of the Iran conflict. However, the underlying reasons appear more nuanced than geopolitical headlines alone. Crypto is increasingly competing with AI-driven equities for investor attention, while bitcoin's own cyclical dynamics suggest the market may still be searching for a durable bottom.
Crypto lags behind equities
A June 1 report from Wintermute, a leading crypto OTC desk, published before Tuesday's decline, noted that crypto had failed to participate in the broader risk-asset rally for two consecutive weeks - the clearest decoupling from equities seen this year.
Stocks have rallied almost uninterrupted since April, despite a macro backdrop that remains far from ideal. Core PCE inflation has edged higher, the US
10-year Treasury yield remains around 4.45%, and markets still assign meaningful odds to further monetary tightening this year.
Under normal circumstances, crypto - one of the most risk-sensitive asset classes - would be expected to benefit from improving market sentiment. Instead, it has lagged.
The explanation may be straightforward. Equities currently have a powerful narrative to support valuations: artificial intelligence. Corporate earnings continue to benefit from massive AI-related spending, allowing investors to look past macroeconomic concerns. Crypto lacks a similarly dominant catalyst. As a result, while the Nasdaq has been able to rally on the back of AI optimism, crypto remains far more exposed to inflation, rates and geopolitical uncertainty.
Indeed, the bid that helped push bitcoin from $70,000 to $80,000 in April seems to be gone. Since May 7, spot BTC ETFs have seen almost exclusively outflows, now amounting to over $5 billion, according to Coinglass.
Even Strategy (MSTR), bitcoin's most aggressive corporate accumulator, recently surprised the market by selling a small portion of its holdings. Between May 26 and May 31, the company offloaded 32 BTC, generating approximately $2.5m in proceeds. Relative to its treasury of more than 700,000 bitcoin, the sale was insignificant. Symbolically, however, it carried more weight. Michael Saylor had repeatedly stated that Strategy had no intention of selling bitcoin, making even a modest disposal notable. The fact that the sale occurred during a period of market weakness did little to improve sentiment.
Yet bitcoin is so much more than a diversification asset for institutional investors and corporate treasuries. As Bloomberg ETF specialist Eric Balchunas recently said, the market may have become overly focused on the ETF and Strategy narrative while overlooking bitcoin's core value proposition.
“ETFs/MSTR should be seen as icing on cake, not whole cake,” Balchunas wrote. “A store of value the government can't debase or mess with is the cake.”
BTC cycle continues
The recent decline has certainly been painful. According to Coinglass, more than $846m in bitcoin positions were liquidated over the past 24 hours, the vast majority of them long bets. Across the broader crypto market, liquidations approached $1.8bn. Those figures are substantial but far from unprecedented. For comparison, one of the largest liquidation cascades on record followed the escalation of US-China tariff tensions in late 2025, when more than $19bn were wiped out in a single day.
Viewed through that lens, Tuesday's sell-off looks less like a structural breakdown and more like a leverage reset. Excess positioning has been flushed from the market, creating cleaner conditions for price discovery. Bitcoin may still move lower before finding a cyclical bottom, but such resets have historically paved the way for the next rally.
Some investors have already started positioning for that outcome. Wintermute reports that even as near-term conditions remain challenging, particularly heading into the seasonally weaker summer months, its OTC desk is seeing long-term investors gradually accumulate through time-weighted purchases. Rather than attempting to catch the exact bottom, these buyers appear to view current prices as attractive on an 18-month horizon.
On-chain data, however, suggests the final bottom may not be in yet. As Glassnode notes, long-term holders remain under moderate pressure but are far from the levels of stress historically associated with major cycle bottoms. At a bitcoin price of roughly $69,500, Long-Term Holder Relative Unrealized Loss stood at 15.5%. In practical terms, long-term holders were carrying about $0.15 of unrealized losses for every dollar of value held. During previous cycle lows, that figure exceeded $0.50.
The prevailing view across much of the crypto market is that bitcoin may still need to establish a deeper cyclical bottom. Crypto analyst Benjamin Cowen believes that the most likely scenario is a local low forming sometime in June, like it did in June 2018 and June 2022. A deeper retracement extending into October cannot be ruled out either.
Yet if history continues to rhyme, the next stage would eventually be the same as before: accumulation, recovery and a new advance. Bitcoin's 4-year cycle has repeatedly tested investors' patience before rewarding them, and this cycle may prove no different.
