Investors holding BTC for at least 12 months saw daily profits exceed $1 billion last week. However, the crypto market saw a sharp downturn on June 5th, with Bitcoin (BTC) approaching $106,000 but failing to break through, followed by a significant drop. At around 4 a.m. on June 6th, BTC dipped to $100,372, nearly breaking the $100,000 mark, before rebounding to around $102,000. Ethereum (ETH) also failed to break $2,800 and fell to a low of $2,381, with a 24-hour drop of over 7%. Altcoins generally saw widespread declines.

In terms of contract data, Coinglass reported that over the past 24 hours, $983 million in liquidations occurred across the entire network, with $892 million in long positions being liquidated. The largest single liquidation was a $10 million Bitmex - XBTUSD order.

Traditional markets also showed mixed signals. The Dow Jones Industrial Average fell 108.00 points to 42,319.74, down 0.25%; the S&P 500 dropped 31.51 points to 5,939.30, down 0.53%; and the Nasdaq fell 162.04 points to 19,298.45, down 0.83%. Tesla shares plummeted over 14% due to the conflict between Elon Musk and Donald Trump, marking its largest single-day drop in history.

What Caused the Major Pullback?

Musk-Trump Feud

On June 4th, Elon Musk publicly criticized a core bill promoted by the Trump administration on his social media platform X, calling it a "massive, outrageous, pork-filled Congressional abomination". Musk also reposted discussions about impeaching Trump and replacing him with JD Vance, to which he commented "Yes".

In response, Trump posted on his social media platform, defending the bill as one of the greatest ever submitted to Congress, with record spending cuts and the largest tax cuts ever. The public spat between the two led to a 14.3% drop in Tesla shares, with its market value shrinking by $153 billion. Musk, who holds about 12.8% of Tesla's shares, saw his stake lose over $19.5 billion.

The feud between the world's richest and most powerful figures has caused significant turmoil in both traditional and crypto markets.

Investors Taking Profits

Bitcoin's recent ATH has led to significant profit-taking, with an average profit of about 16% per BTC. According to glassnode, investors holding BTC for at least 12 months saw daily profits exceed $1 billion last week. This is the fifth-largest increase in this cycle.

Notable analyst Willy Woo also pointed out that whales holding over 10,000 BTC have been selling since 2017, with most of their BTC purchased between $0 and $700, held for 8 to 16 years. The profit-taking by whales and traders has undoubtedly put immense selling pressure on the market, making price drops inevitable if buying support is weak.

Seasonal Trends

Crypto markets, like stock markets, often exhibit seasonal trends. Historically, June has been a "neutral" month for Bitcoin, with an even split of positive and negative returns since 2013. The average return in June is only 1.9%, with a 50% chance of gains. This seasonal trend has led some investors and traders to step aside and wait for better conditions.

Fed Rate Cuts Delayed Until September?

The Federal Reserve's delay in rate cuts has added to the liquidity concerns in the crypto market. After the latest unemployment data, federal funds futures tied to the Fed meeting showed a shift to a dovish stance, with a 100% chance of a 0.25% rate cut by the September meeting. The market now expects a total of 60 basis points in rate cuts this year, up from 56 basis points.

Fed Governor Christopher Waller said he believes the inflationary impact of tariffs might be a one-time shock, and the Fed could still cut rates by the end of the year. However, other officials argue that it is too early to conclude this, and rate cuts should be approached with caution.

Future Outlook

On May 30th, Willy Woo warned that if Bitcoin does not rebound within the next two and a half days, it will form a bearish divergence on the weekly chart, potentially leading to a prolonged period of low volatility. Weiss Crypto suggested a short-term support range for BTC between $98,000 and $94,000, with a primary support/resistance level at $89,500. Trader Eugene Ng Ah Sio posted on his channel that he has gone long on Ethereum, with a stop-loss set at the morning's low of $2,380, which is also the retest level for the mid-term time frame.