A hand holding a physical Bitcoin coin, illustrating crypto market positioning and leverage.
A physical Bitcoin coin held in hand. | Satheesh Sankaran / Wikimedia Commons (CC BY 2.0)

TL;DR

Bitcoin fell below $73,000 on Thursday, May 28, its lowest level since mid-April, after fresh US strikes on Iran tipped risk assets lower. The bigger story for traders sits underneath the price. Nearly $1 billion in leveraged positions were liquidated over 24 hours, and roughly 93% of that was long positions. Funding rates had stayed positive into the drop, meaning traders were paying to hold long bets even as spot demand faded. On top of that, a fund manager flagged a roughly $150 billion US Treasury settlement wave running from May 28 to June 5 that pulls cash out of the financial system. This piece looks at the market structure rather than the headline, because the positioning and liquidity backdrop is what shapes the next move.

What Happened

Bitcoin traded near $73,300 on Thursday afternoon, down about 2.5% on the day and roughly 6% on the week, according to CoinGecko data. It briefly touched a session low around $72,700, the weakest level since April 13. Ethereum lost the $2,000 mark intraday and changed hands near $2,010, while Solana slipped to about $82. The immediate trigger was a renewed military exchange between the US and Iran, which pushed investors out of risk assets and into a defensive stance.

The selling was amplified by forced liquidations. Across the market, nearly $1 billion in leveraged positions were closed out in 24 hours, wiping out more than 165,000 trader accounts. Bitcoin accounted for the largest share at roughly $366 million to $386 million, followed by Ethereum near $239 million to $246 million, based on figures cited by CoinDesk and The Defiant. Long positions made up about 93% of the total, which tells you the crowd was leaning the wrong way when the move hit.

This came alongside heavy outflows from US spot Bitcoin exchange-traded funds. BlackRock's IBIT logged a record single-day net outflow of around $528 million, part of a multi-day losing streak. ChartDojo covered that ETF flow picture earlier today in a separate report on the debasement-trade retreat. The focus here is the derivatives and liquidity side rather than the fund flows.

The Leverage Flush: Why Positive Funding Mattered

Funding rate is the periodic payment exchanged between traders holding perpetual futures. When the rate is positive, traders who are long pay traders who are short. A persistently positive rate signals that the crowd is crowded onto the long side and is willing to pay a premium to stay there.

Heading into Thursday, Bitcoin's funding had been positive for much of May even as price drifted lower from highs near $82,000. That is an awkward combination. It means leveraged buyers kept adding exposure while spot buying weakened. When price finally broke, those long positions hit their liquidation levels, and each forced sale pushed price down a little more, which triggered the next batch. One stretch saw about $345 million liquidated in a single hour as the Iran news crossed the wire.

The cleaner read is that this was a positioning washout rather than a fundamental repricing. A leverage flush clears out crowded bets and resets open interest, which can eventually set up a healthier base. The risk is that if funding turns positive again too quickly, the same vulnerability rebuilds before price has stabilized.

The $150 Billion Liquidity Drain Into June 5

The second piece is a macro plumbing story. Michael Kramer of Mott Capital Management flagged that US Treasury settlements between May 28 and June 5 could drain roughly $150 billion of liquidity from the system. The schedule he cited includes a $15 billion Treasury-bill settlement on May 29, about $47 billion on May 30, roughly $68 billion on June 1, and a further $16 billion on June 2.

Here is the mechanism in plain terms. When the Treasury sells new bills and bonds, buyers pay cash, and that cash moves into the Treasury's account at the Federal Reserve. While it sits there, it is out of the banking system and unavailable for other uses. All else equal, that tightens financial conditions for a stretch. Kramer's view is that Bitcoin often acts as an early liquidity gauge, so a drain like this can weigh on it before it shows up elsewhere. This is one analyst's framework, not a guaranteed outcome, but it gives traders a concrete calendar to watch.

Implications for Traders

Crypto traders: The combination of a long-heavy washout and a near-term liquidity drain argues for caution on fresh leverage. The $72,000 area is the obvious support to watch, with the prior April low just below it. Funding rate is now the tell. If it stays neutral to slightly negative while price holds, that points to a healthier reset. If funding snaps back positive while price is still soft, the setup for another squeeze rebuilds.

Equity and futures traders: The same liquidity drain that pressures crypto can weigh on broader risk appetite into early June. Short-dated Treasury yields and the dollar are worth tracking, since a firmer dollar usually coincides with tighter conditions for risk assets. The macro backdrop is already tense after April PCE printed a three-year high earlier today. Crypto-linked equities tend to move with spot Bitcoin and can amplify the swing in either direction.

All traders: Geopolitics remains the wildcard. The Iran situation can move prices faster than any scheduled settlement, so position sizing matters more than precise level-picking right now.

Potential Positives vs Negatives

Positives: A leverage flush of this size clears crowded long positioning, which historically reduces the fuel for further cascade selling. If funding normalizes and the Iran situation de-escalates, the $72,000 to $73,000 zone could act as a base. The liquidity drain is a known, time-boxed event that ends around June 5, after which the cash headwind eases. Spot holders who avoided leverage are largely unaffected by the derivatives unwind.

Negatives: The drop broke a multi-week support shelf near $75,000, which can become resistance on any bounce. ETF outflows show institutional demand is soft, removing a steady bid. If funding turns positive again before price stabilizes, the market stays vulnerable to another squeeze. The $150 billion drain runs concurrently with the geopolitical risk, so two separate pressures overlap into early June.

What Could Happen From Here

Base case: Bitcoin chops between roughly $70,000 and $76,000 as the liquidity drain plays out and positioning resets. Funding stays neutral, ETF outflows slow but do not reverse, and price grinds sideways into June. Confirmed by: funding rate holding near zero, daily ETF flows turning less negative, and BTC defending the $72,000 area on a closing basis.

Upside scenario: The Iran situation de-escalates, the liquidity drain passes without a deeper break, and spot buyers step in near support. Funding stays muted while price recovers, signaling demand rather than leverage. Bitcoin reclaims $76,000 and pushes back toward $80,000. Confirmed by: a sustained move back above $76,000, ETF inflows resuming, and funding staying contained on the way up.

Downside scenario: The $72,000 support gives way as the liquidity drain bites and Iran headlines worsen. A loss of that level opens the $68,000 region, with some analysts pointing lower still. A fresh round of long liquidations accelerates the move. Confirmed by: a daily close below $72,000, funding flipping deeply negative on capitulation, and ETF outflows accelerating.

What Traders Should Watch Next

  • Bitcoin's $72,000 support and the April low just beneath it, on a closing basis
  • Perpetual funding rates, the key signal for whether leverage is resetting or rebuilding
  • The Treasury settlement calendar through June 5, especially the larger June 1 settlement
  • Daily US spot Bitcoin ETF flows for any sign institutional demand is returning
  • US-Iran headlines, which can override the scheduled liquidity story at any moment

FAQ

What is a long liquidation?
A long liquidation happens when a trader who borrowed to bet on a rising price can no longer meet the margin requirement as price falls. The exchange automatically closes the position by selling, which adds to downward pressure. When many longs are liquidated at once, the selling can cascade and push price lower in a short window.

Why would a Treasury settlement affect Bitcoin?
When the Treasury sells new debt, buyers pay cash that moves into the government's account at the Fed and temporarily leaves the banking system. That tightens available liquidity. Risk assets, including Bitcoin, tend to trade better when liquidity is plentiful and can come under pressure when it is pulled, even briefly.

Sources

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Header image source: Wikimedia Commons by Satheesh Sankaran. License: CC BY 2.0.