This report is for professional investors and information purposes only. Persons without professional investment experience should not rely on it. Not investment advice or a personal recommendation. Cryptoassets are high risk and volatile and you may lose all capital invested. See full risk information at the end of this document.
- Performance: Markets turned decisively risk-off, with Bitcoin sliding to a fresh cycle low near $58,000 and Ether falling harder to a ~13-month low around $1,507; crucially, the stress has now spread to traditional risk assets, as US equities sold off sharply (Nasdaq -4.7% Friday) and the KOSPI triggered a circuit breaker (-8%), driven by a hot US payrolls print (+172k) that pushed rate expectations back toward hikes.
- Cryptoasset Sentiment Index: The index triggered a tactical contrarian buying signal on the 3rd of June - its most bearish reading since the 5/2 capitulation - and still signals slightly bearish sentiment, with only 8 of 15 indicators above trend amid extreme fear, heavy short-term-holder loss-taking, and bearish CME futures positioning (-12.7% of open interest).
- Chart-of-the-Week: Highlights Bitcoin's role as the "canary in the macro coal mine" - because it trades continuously and reacts fast to liquidity shifts, it has historically led equity corrections by at least a couple of months; if that lead-lag holds, it implies further downside for stocks but may leave Bitcoin relatively better positioned, having already completed much of its correction.
Chart of the Week
Performance
Cross-asset performance was decisively risk-off over the past week. Bitcoin extended its decline to a fresh cycle low of around $58,000, while Ether fell even harder in relative terms, printing an intraday low near $1,507 - its weakest level in roughly 13 months. The major cryptoassets thus continued the downtrend that has been in place since last autumn's highs, with altcoins broadly underperforming Bitcoin as liquidity thinned and risk appetite evaporated.
What is increasingly noteworthy, however, is that traditional risk assets have now begun to crack as well.
US equities sold off sharply into the end of last week, with the Nasdaq down -4.7% on Friday alone - its worst session in months. The weakness has carried into early Monday trading: the KOSPI, one of the principal beneficiaries of the global AI trade, was halted after only minutes of trading this morning, triggering a circuit breaker as it fell roughly -8%, with Samsung Electronics and SK Hynix both shedding around -10%. In other words, the epicentre of the equity drawdown sits precisely in the most crowded, most richly valued corner of the market.
This is consistent with what some of our preferred technical signals have been flagging. The fractal dimension, for instance, has been pointing to an elevated risk of correction in exactly these "hot" areas of the market - semiconductors chief among them - where positioning and valuations had become somewhat stretched.
The proximate catalyst for the latest leg lower appears to be macro.
US non-farm payrolls surprised sharply to the upside at +172k, well above the consensus expectation of around +85k. A labour market this resilient, set against inflation that remains way above target, has pushed market expectations back towards Fed rate hikes rather than cuts, lifting sovereign bond yields and putting renewed pressure on equities trading at elevated multiples. Higher discount rates are rarely kind to long-duration, high-valuation assets.
Here we would highlight a pattern we have emphasised before: Bitcoin tends to be the canary in the macro coal mine.
Because it trades continuously and responds quickly to shifts in global liquidity, Bitcoin has historically anticipated turning points in broader risk assets - previous equity-market corrections have been preceded by bear markets in the Bitcoin price by at least a couple of months (Chart-of-the-Week).
The current backdrop rhymes with that template. Credit conditions already look tight beneath the surface: pockets of private credit and the leveraged-loan market remain under visible stress and continue to see meaningful investor outflows - typically an early sign that liquidity is being withdrawn from the system.
If this lead-lag relationship continues to hold - i.e. Bitcoin leading equities - it would imply further downside ahead for stocks. Paradoxically, this may leave Bitcoin relatively better positioned. First, as we noted in our previous report, cryptoasset valuations are now comparatively undemanding relative to equities. Second, as we flagged in one of our recent monthly reports, Bitcoin has already conducted much of its correction in advance, rather than still having it ahead of it.
Finally, the geopolitical backdrop has deteriorated once more. Tensions in the Middle East have resurfaced, with fresh Iranian attacks on Israel and retaliatory strikes by Israel. Live Bloomberg shipping data still show no meaningful recovery in maritime traffic through the Strait of Hormuz, which remains effectively closed. This continues to represent a significant tail risk for energy prices and, by extension, for inflation, bond yields, and ultimately equities as well.
In general, among the top 10 crypto assets LEO, TRON, and XRP were the relative outperformers. Ethereum underperformed bitcoin last week.
Sentiment
Our in-house “Cryptoasset Sentiment Index” has triggered a tactical contrarian buying signal on the 3rd of June last week – it hit the most bearish sentiment level since the 5/2 market capitulation. As of this morning, the index is still signalling a slightly bearish sentiment.
At the moment, 8 out of 15 indicators remain above their short-term trend.
Last week, there were significant reversals to the downside in the futures liquidations dominance due to a dominance in long futures liquidations and the STH-SOPR which signals significant loss-taking by short-term holders – rather unsophisticated investors.
The Crypto Fear & Greed Index has deteriorated significantly last week. As of this morning, it is signalling an “extreme fear” level of sentiment.
Performance dispersion decreased last week as most altcoins remained highly correlated with bitcoin.
When dispersion decreased, it may indicate that the market appears to be driven by a less diverse set of narratives which, in our analysis, has historically been associated with periods of declining risk appetite in prior market cycles.
Altcoin outperformance vis-à-vis Bitcoin declined somewhat with 50% of our tracked altcoins in the index outperforming. Ethereum underperformed bitcoin last week.
Sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) has declined to 0.56 over the past week, signalling that risk appetite is decreasing in traditional markets.
CME Bitcoin Commercials Net Positioning, which shows the difference between long and short CME Bitcoin futures contracts has decreased even more to around –12.7% of open interest, indicating a very bearish outlook on near-term price direction.
All in all, Crypto market sentiment turned sharply bearish last week - triggering a contrarian buy signal at the most pessimistic level since the 5/2 capitulation - as fear indicators, short-term-holder loss-taking, declining risk appetite (in both crypto and traditional markets), and bearish CME futures positioning all signalled weakening near-term outlook.
Fund Flows
Net outflows from global crypto ETPs continued to be elevated last week with around -1,823.1 mn USD across all types of cryptoassets, after -1,744.9 mn USD in net outflows the previous week.
Global Bitcoin ETPs continued to experience net outflows of -1,656.7 mn USD last week, of which -1,757.2 mn USD in net outflows were related to US spot Bitcoin ETFs.
The Bitwise Bitcoin ETF (BITB) in the US experienced net outflows of -15.6 mn USD last week.
In Europe, the Bitwise Physical Bitcoin ETP (BTCE) experienced net outflows equivalent to -3.0 mn USD, as the Bitwise Core Bitcoin ETP (BTC1) experienced net inflows of around +1.1 mn USD.
The Grayscale Bitcoin Trust (GBTC) posted net outflows of -144.4 mn USD whereas, the iShares Bitcoin Trust (IBIT) experienced sharp net outflows of around -1,337.3 mn USD last week.
Meanwhile, global Ethereum ETPs experienced -136.2 mn USD in net outflows last week, of which US spot Ethereum ETFs recorded net outflows of around -175.9 mn USD on aggregate.
The Grayscale Ethereum Trust (ETHE) posted net outflows of -0.7 mn USD, whilst the iShares Ethereum Trust (ETHA) saw net outflows of -124.7 mn USD.
The Bitwise Ethereum ETF (ETHW) in the US experienced neither in- nor outflows last week.
In Europe, the Bitwise Physical Ethereum ETP (ZETH) recorded minor net outflows of -0.1 mn USD, whilst the Bitwise Ethereum Staking ETP (ET32) saw net inflows of +0.2 mn USD.
Altcoin ETPs ex Ethereum also saw net outflows of -2.4 mn USD last week.
Thematic & basket crypto ETPs posted net outflows of -27.8 mn USD on aggregate last week. The Bitwise MSCI Digital Assets Select 20 ETP (DA20) didn't record any flows last week (+/- 0 mn USD).
To sum up, global crypto ETPs saw continued heavy net outflows of roughly -1,823 million USD last week, driven mainly by Bitcoin ETPs (-1,657 million USD, led by IBIT's -1,337 million USD) and Ethereum ETPs (-136 million USD), with altcoin and thematic products also posting smaller outflows.
On-Chain Data
Bitcoin collapsed to its lowest price of the cycle this week, reaching $59k and setting a new structural lower low. With altcoin correlations and beta to Bitcoin near all-time highs, the broader complex experienced a similar shock. Notably, total digital asset market capitalisation declined by $410bn over the week, with only 0.66% of trading days recording a larger USD drawdown. In relative terms, this equates to a 19% decline, with only 3.2% of trading days recording a larger move. Across both absolute and relative measures, the digital asset drawdown was substantial.
Aggregate investor stress has reached its highest level of the cycle, with the value of capital held at a loss estimated at approximately $920bn, equivalent to around 85% of all invested value. From a supply perspective, 52% of coins are now underwater, meaning loss-bearing supply has overtaken supply held in profit. Historically, conditions of this magnitude have been associated with the deepest phases of bear markets.
In previous editions, we have highlighted that the market remained acutely illiquid and that price would likely need to move meaningfully to unlock latent supply. This is now becoming evident, with loss-taking surging across investors. At its peak, net realised losses reached $1.34bn, matching the scale of the November 2025 capitulation, though still below the February 5th event, which reached $2.48bn.
Interestingly, Long-Term Holders (LTHs), representing mature investors who have held coins for more than 155 days, have recorded their weakest spending dynamics since March 2023. At present, the average LTH coin being spent is realising a 23% loss, with only 13% of trading days recording a larger loss magnitude.
Increasing the granularity, the majority of loss-taking occurred across coins aged 6–12 months, representing investors who have only recently transitioned into Long-Term Holder status. This was supplemented by sizeable losses from coins aged 24 hours to 6 months. Outside of these cohorts, loss-taking remained largely muted, suggesting that investors who acquired coins over the past year were the dominant source of realised losses, while more seasoned holders remained comparatively resilient.
Furthermore, the majority of coins spent over the past month were acquired around the $78k–$81k region, suggesting that many recent rally buyers have now been flushed out. At the same time, substantial accumulation has occurred between $59k and $66k. This is a constructive longer-term signal, as aggregate acquisition prices are improving and investors who perceive deeper value in this zone are beginning to step in and accumulate.
Strategy's STRC continues to trade below par, declining further to $91.2 versus its $100 stated amount, marking its largest discount on record excluding the initial trading day. When the instrument trades below par, additional issuance becomes less efficient, placing pressure on the company's near-term accumulation strategy.
This follows Strategy's recent sale of 32 BTC, which added to already depressed investor sentiment. However, the sale itself was marginal in size and is largely being interpreted as a signal that the company may prioritise fiduciary responsibilities to investors, including the potential for further sales if required.
The Realised Price, representing the market's average cost basis, and the 200-week moving average have historically provided useful proxies for terminal cycle-low regions during deep bear markets. These levels currently sit at $53.6k and $61.8k, respectively, with our base case being that terminal valuation forms somewhere within this range. However, in the event of further downside, the LTH Realised Price at $48k remains the next key pricing level below.
Our composite valuation indicator, which assesses tactical undervaluation (construction and methodology explained in our article here ), has fallen to its 4th percentile. Historically, readings at this level have been associated with acute market undervaluation.
For more information on the recent capitulation where we discuss market valuation and key pricing levels in more detail, please read our recent note here.
Taken together, the latest decline represents one of the most severe stress events of the cycle, with broad-based digital asset drawdowns, acute investor stress, and realised losses reaching historically elevated levels. However, the structure of the sell-off suggests capitulation has been concentrated primarily among recent buyers, while more seasoned cohorts remain comparatively resilient. With Bitcoin trading near the 200-week moving average and approaching the Realised Price region, valuation conditions are entering zones historically associated with late-stage bear-market formation, although further downside risk remains possible.
Futures, Options & Perpetuals
Over the past week, BTC perpetual futures open interest decreased slightly by approximately -5.24k BTC, while CME futures open interest rose by around +3.07k BTC versus the prior week. That combination suggests leverage was reduced modestly across offshore perpetuals, while institutionally oriented venues saw a small rebuild in positioning. Aggregate futures liquidations increased sharply from the prior week. In total, liquidations reached roughly $7.15bn over the week, versus $2.30bn previously, with long liquidations of $5.80bn and short liquidations of $1.35bn, marking the highest weekly liquidation event since early February.
The scale of liquidations was driven by the speed of the break below key support levels. Bitcoin moved below $70,000 after reports that Iran had suspended peace talks with the US, triggering a broader risk-off move across crypto markets. Once that level gave way, leveraged long positions were forced out rapidly, creating mechanical selling pressure and accelerating the decline. Added pressure from Strategy's first reported Bitcoin sale since 2022 further weakened sentiment. BTC has since bounced near its 200-week moving average, a historically important reference level, though the broader market remains fragile. Liquidity is now forming around $60k on the downside and around $63k on the upside, leaving the market in a narrower range after the sharp deleveraging event.
Perpetual funding rates, measured on a 7-day moving average, ended the week lower at around +5.97% annualised. That suggests futures positioning became less constructive as spot price action weakened, with long exposure being flushed from the market during the liquidation cascade.
At the same time, the BTC 3-month annualised basis ticked up to around +3.27%. That leaves the futures curve firmer than last week, suggesting some recovery in term futures demand even as perpetual markets became more cautious. While still modest by historical standards, the move points to a tentative rebuild in institutional risk appetite following the sharp deleveraging.
In options markets, BTC Deribit options open interest increased modestly by roughly +59.47k BTC, bringing total open interest up to 418.3k BTC. The Deribit put-to-call open interest ratio was broadly flat at 0.63, while the equivalent metric across IBIT options moved lower to 0.70 by week's end.
Taken together, these moves suggest options exposure increased on Deribit without a meaningful shift in directional positioning. The flat Deribit put-to-call ratio points to balanced crypto native options demand, rather than a sharp increase in downside hedging. By contrast, the decline in the IBIT put-to-call ratio suggests ETF-linked options positioning became slightly less defensive.
The 25-delta skew moved slightly higher across the term structure during the week. That suggests options markets saw a modest increase in demand for downside protection, though the move was not extreme relative to the scale of the spot selloff and liquidation event.
Total GEX, on a 7-day moving average basis, increased from -$3.97bn to -$1.09bn. This suggests dealer positioning has become less negative, reducing the potential for hedging flows to amplify price moves compared with last week. However, gamma remains negative overall, so the market can still be sensitive around key strike levels.
Dealer gamma exposure also remains concentrated around important nearby levels, with the bulk of negative gamma clustered around the $65k strike. That leaves the market most sensitive to a renewed move higher towards that level, particularly if spot breaks through the $63k liquidity area. By contrast, positive gamma has moved higher to the $80k area, suggesting stabilising dealer flows are now much further above spot and unlikely to provide near-term support unless the market stages a stronger recovery.
In short, Bitcoin's break below $70,000 - triggered by geopolitical risk-off and Strategy's first BTC sale since 2022 - drove the largest weekly liquidations since early February ($7.15bn, mostly forced longs), leaving the market in a fragile, deleveraged state with cautious perpetual funding, a tentative rebuild in institutional/term-futures demand, balanced options positioning, and dealer gamma still negative but less so, keeping prices sensitive around the $63–65k zone.
Bottom Line
- Performance: Markets turned decisively risk-off, with Bitcoin sliding to a fresh cycle low near $58,000 and Ether falling harder to a ~13-month low around $1,507; crucially, the stress has now spread to traditional risk assets, as US equities sold off sharply (Nasdaq -4.7% Friday) and the KOSPI triggered a circuit breaker (-8%), driven by a hot US payrolls print (+172k) that pushed rate expectations back toward hikes.
- Cryptoasset Sentiment Index: The index triggered a tactical contrarian buying signal on the 3rd of June - its most bearish reading since the 5/2 capitulation - and still signals slightly bearish sentiment, with only 8 of 15 indicators above trend amid extreme fear, heavy short-term-holder loss-taking, and bearish CME futures positioning (-12.7% of open interest).
- Chart-of-the-Week: Highlights Bitcoin's role as the "canary in the macro coal mine" - because it trades continuously and reacts fast to liquidity shifts, it has historically led equity corrections by at least a couple of months; if that lead-lag holds, it implies further downside for stocks but may leave Bitcoin relatively better positioned, having already completed much of its correction.
Appendix
Data subject to change
Combined positioning = futures and options in % of Ol
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