CryptoSlate
Bitcoin's slide toward $60,000 last week triggered nearly $10 billion in long futures liquidations, the sharpest leverage flush of the year. BTC fell almost 14% before rebounding to around $63,000, but the recovery papered over a deeper shift: the market's marginal buyer has rotated from crypto to artificial intelligence, leaving Bitcoin's derivatives-heavy positioning exposed when the bid thinned out.
Why it matters
The framing from Charles Schwab's Jim Ferraioli and NYDIG's Greg Cipolaro is that capital rotation, not leverage alone, drove the flush. AI has become the dominant momentum trade of 2025, drawing flows into listed equities, data-center infrastructure, and pre-IPO private names like SpaceX, OpenAI, and Anthropic. For investors who once used Bitcoin to express a high-growth technology view, that bucket is no longer empty. Strategy Executive Chairman Michael Saylor crystallized the squeeze last week: roughly $400 billion has flowed into AI infrastructure over the past six months, while US-listed spot Bitcoin ETFs have shed about $4 billion in outflows since mid-May. The overlap in the underlying investor base — both sectors trade on emerging-tech exposure, TAM, and return asymmetry — means every marginal dollar leaving BTC is a candidate dollar going into AI-linked trades.
Market impact
Leverage magnified the rotation into forced selling. Futures open interest had recovered to roughly $51 billion by May, up from a February floor near $31 billion, after climbing back from a 2024 high around $70 billion. When BTC turned lower, that rebuilt exposure became fuel: nearly $10 billion of long positions were wiped out, funding rates slipped back toward negative, and open interest fell as exposure was removed rather than rotated. Hedge funds did most of the selling — by May 31 their share of BlackRock's IBIT had dropped to around 19% from 29% — while investment advisers added through the weakness and retail brokers trimmed. The technical picture is a familiar flush setup: BTC is back at February lows, near efficient miner production costs, and testing the 200-week moving average. A constructive base would need open interest to stabilize, funding to flatten, and ETF outflows to fade. If AI-linked flows keep absorbing the marginal dollar, even a clean leverage reset may not be enough to put a durable floor under Bitcoin.
Frequently asked questions
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How much was liquidated during Bitcoin's drop toward $60,000?
Nearly $10 billion in long futures positions were liquidated as Bitcoin fell almost 14% last week, before the price recovered to around $63,000. The bulk of the selling came from hedge funds trimming exposure.
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Why are investors rotating out of Bitcoin and into AI?
According to Charles Schwab and NYDIG, artificial intelligence has become the dominant momentum trade of 2025, drawing capital into listed AI equities, data-center infrastructure, and pre-IPO names like SpaceX, OpenAI, and Anthropic — the same investor base Bitcoin once captured for high-growth tech exposure.
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How much has flowed into AI versus Bitcoin ETFs?
Michael Saylor noted roughly $400 billion has moved into AI infrastructure over the past six months, while US-listed spot Bitcoin ETFs have seen about $4 billion in net outflows since mid-May. The contrast frames AI as the bigger magnet for the marginal dollar.
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What does the leverage picture look like after the flush?
Futures open interest had rebuilt to about $51 billion by May, up from a February low near $31 billion, before the selloff. Open interest fell, funding rates slipped negative, and hedge funds cut their share of BlackRock's IBIT to roughly 19% from 29% by May 31.
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Has Bitcoin found a bottom yet?
Not confirmed. BTC is back near February lows, efficient miner production costs, and the 200-week moving average — levels traders watch for exhaustion. A durable base would need open interest to stabilize, funding to flatten, and ETF outflows to fade; AI-linked flows continuing to absorb capital could keep pressure on…
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