Bitcoin's Split Screen: A Million-Coin Reserve Plan Meets a $1.6 Billion Liquidation

Bitcoin drops below $60K as a brutal liquidation cascade wipes $1.6B in leveraged positions, while a proposed US law aims to buy 1 million BTC over five years.

The Bitcoin market is caught in a schism. On one side stands a proposed US law that would hoover up a million coins over five years, a state-level endorsement of digital gold. On the other, a brutal liquidation cascade has just wiped out $1.6 billion in leveraged positions, pushing the largest cryptocurrency below $60,000 for the first time since October 2024.

As of Friday, Bitcoin changes hands at $63,796, a modest 0.35% dip on the day but a 13.25% weekly loss and a 21.17% decline over the past 30 days. The immediate trigger was a blockbuster US jobs report — 172,000 new positions versus the 85,000 economists expected — that resurrected rate hike fears and sent risk assets reeling.

Political tailwind, market headwind

On May 21, Congressman Nick Begich introduced the American Reserve Modernization Act, a bipartisan bill that mandates the Treasury to purchase 200,000 BTC annually for five years, targeting a total reserve of one million Bitcoin. Holdings would be locked for 20 years, with quarterly proof-of-reserves required. The financing is designed to be budget-neutral — no new taxes or debt.

If enacted, the US would become the largest sovereign accumulator by a wide margin. But for now, the market is focused on the carnage in front of it.

Two institutional stories diverge

The contrasting strategies of two major corporate holders capture the moment. The Bitcoin Standard Treasury Company (BSTR) is on the verge of going public via a SPAC merger with Cantor Equity Partners I, expected to close by the end of June 2026. BSTR will launch with 30,021 BTC and plans to grow that to over 50,000, funded by a $1.5 billion package that includes a 5,021 BTC in-kind PIPE and $200 million from the SPAC trust. CEO Adam Back promises active options and arbitrage strategies to boost Bitcoin per share — a clear departure from passive hoarding.

Meanwhile, Strategy (formerly MicroStrategy) did something it hadn't done in nearly four years: it sold. Between May 26 and May 31, the company offloaded 32 BTC for roughly $2.5 million at an average price of $77,135, using the proceeds for preferred stock dividends. The sale is a rounding error against its 843,706 BTC hoard, but the psychological signal is unmistakable. Michael Saylor used the moment to publish an essay dissecting four competing Bitcoin philosophies — maximalists, capitalists, technologists, fundamentalists — and argued for disciplined integration into traditional finance, leaving the base layer as "sacred infrastructure."

Leverage gets washed out

The flash move under $60,000 on June 5 triggered a cascade of forced liquidations totaling roughly $1.6 billion in 24 hours, with longs accounting for $1.42 billion of that. The Crypto Fear & Greed Index tumbled to 11 — "Extreme Fear" — while the relative strength index sank to 18.2, deep in oversold territory. Spot Bitcoin ETFs saw net outflows of $326 million on that single day, extending a streak that has now lasted 13 consecutive trading sessions and drained $4.37 billion from the products. Roughly three-quarters of that exodus came from BlackRock's iShares Bitcoin Trust, a bellwether of institutional sentiment.

Tax clarity on the horizon

Adding a regulatory angle, a House committee released several draft proposals on June 5 that aim to clarify the taxation of digital assets. A formal hearing is scheduled for June 9. The drafts include a de minimis exemption for gas fees under $10, and a rule that would defer tax on mining and staking income until the assets are sold, rather than at receipt. On the other side, the proposals would introduce wash-sale rules for crypto, limiting the ability to immediately rebuy similar assets after booking a tax loss.

In the short term, none of these developments have arrested the slide. The next major support zone around $55,000 is now in traders' crosshairs. Even Luxembourg's state pension fund — which allocated 1% to Bitcoin in October 2025 — has done little to steady the market. With ETF outflows still accelerating and investor rotation into AI-related assets, Bitcoin's recovery depends on regaining the $60,000 level and breaking the cascade of panic. Until that happens, the gap between Washington's long-term ambition and Wall Street's short-term pain will only widen.