Bitcoin Shakes Off 8% Drop—Leverage Purged, But Brace for Bumpy Ride Ahead

Bitcoin just took an 8% nosedive—enough to flush out overleveraged traders but leaving the market primed for short-term chaos.

Volatility isn’t dead: The correction wiped out risky positions, yet price action remains unstable. Traders now face a fork in the road: buy the dip or wait for clearer skies.

Meanwhile, Wall Street ’experts’ will spin this as either a catastrophic crash or a ’healthy correction’—depending on which narrative juices their commissions.

Foreshadowing turbulence

Spot Bitcoin exchange-traded funds (ETFs) highlighted this movement. Investors added $6.2 billion in Bitcoin exposure through these investment vehicles in the first four weeks of May while withdrawing $2.7 billion from gold ETFs, according to Bloomberg Intelligence. 

However, BlackRock’s IBIT registered its highest daily outflow in history, shedding nearly $431 million on May 30, according to Farside Investors’. The total outflows on the same day surpassed $616 million, the highest level since Feb. 26.

The report noted that realized gains accelerated last week, and the Relative Unrealised Profit indicator moved beyond its plus-two-standard-deviation band. 

Only 16% of Bitcoin’s trading history shows the gauge at such heights. Past occurrences coincided with brief spikes in volatility as holders crystallized gains. 

Elevated profitability increases sell pressure, forcing spot demand to absorb redistributed coins and maintain the uptrend.

Correction cooled overheating derivatives

At the same time, perpetual futures open interest swelled into Bitcoin’s all-time-high breakout, and now contracts as Leveraged longs unwind. 

Options open interest peaked at $49.4 billion, about $6 billion above January’s high, before the May 29 expiry trimmed the figure to roughly $39 billion. 

The report linked the surge to expanding institutional activity, noting that large derivatives books can amplify price swings when macro liquidity tightens.

The report concluded that the pullback removed excess leverage, aligned supply with organic bids, and reset funding conditions across futures and options. This creates a healthier scenario for an upward movement.

However, on-chain metrics suggest turbulence in the short term, while bitcoin trades just 6.5% below its all-time high.