Why did cryptocurrencies crash so sharply in early June?

Besides what everyone is familiar with:
🐾 Interest rate expectations
🐾 Geopolitical issues
🐾 Decline in risk appetite
📅 June 15th
This day is the deadline for U.S. institutions, companies, and hedge funds to pay estimated taxes for the second quarter.
Many people don’t know,
Large U.S. institutions don’t file taxes once a year,
They are required to prepay taxes quarterly.
Earlier in April and May, the U.S. stock market soared dramatically,
Many institutions actually earned huge profits 😋
To avoid paying so much cash to the government unnecessarily,
They must sell off losing positions in the crypto market before June 15th,
Realize those losses as “statutory losses,” which can directly reduce the amount of the check they need to send to the tax authorities on June 15th.
This is one of the reasons why liquidity in the market has been unusually low and why major players have been selling off collectively in the past two weeks:
Everyone is rushing to do “quarter-end tax harvesting” before the June 15th deadline.
Scenario A: No “tax harvesting”
AI stocks profit: $10 million.
Tax owed (U.S. top capital gains tax about 20% + state taxes, roughly 30%):
$10 million × 30% = $3 million (this money is directly confiscated by the government and can never be recovered).
Bitcoin: Continue holding, still showing a paper loss of $4 million.
Fund’s available net cash:
$10 million (AI stock profit)
$3 million (tax payment) = $7 million.
Scenario B: Institutions deliberately sell Bitcoin at $60k to “harvest losses”
Institutions sell Bitcoin at $60k, effectively turning the $4 million “paper loss” into a “realized loss.” At this point, a magical thing happens:
• Taxable net profit: $10 million (AI stocks) - $4 million (crypto paper loss) = $6 million.
• Tax now owed: $6 million × 30% = $1.8 million.
• At this moment, the institution directly saves the company:
$3 million - $1.8 million = $1.2 million in taxes!
You might say:
“Although they saved $1.2 million in taxes, isn’t the $4 million in crypto just gone?”
In the past, the crypto market was not restricted by wash sale rules.
Unlike traditional stock markets with a 30-day wash sale rule,
At 10:00 AM: Sell Bitcoin at $61,000, successfully locking in a $4 million loss for tax deduction.
At 10:05 AM: Immediately buy back the same amount of Bitcoin at $60,950.
But by 2026, the U.S. IRS has officially introduced Form 1099-DA (cryptocurrency asset broker tax form).
The IRS has “banned” all crypto wash sales.
Large funds are now afraid to “buy and sell instantly”:
To make the tax-deductible losses look “legitimate and natural,” many institutions, after selling Bitcoin at $60k, dare not buy it back immediately.
They choose to first put the cash into U.S. Treasury bonds or directly invest in U.S. stocks to benefit from AI stock gains.
Pretending to exit the market and observe for a while, or even waiting until the next quarter, before reconsidering moving funds back into crypto.
So, it’s not that large institutions are abandoning crypto, but rather they are using legitimate methods to increase profits.
👆🏼 Actually, this method is quite common; once you understand many market/social rules, there are many ways to exploit them for profit.