U.S. long-term bond yields surged as inflation concerns grew.
As of August 23, long-term Treasury bonds have broken through their highest levels in 2022, with 10-year bond yields reaching 4.34%, 20-year bond yields reaching 4.45%, and 30-year bond yields reaching 4.64%, indicating that higher interest rates may be in the future. The market is expecting a persistent and higher interest rate policy, and if the upcoming US core personal consumption expenditure price index shows rising inflation conditions in its release on August 31, this may trigger a further decline in risky assets.
Bitcoin follows the overall market downturn
The recent decline in Bitcoin’s value coincides with a downward trend in the overall market, including declines in the S&P 500, Nasdaq Composite, and gold prices. This downward trend began with the July Federal Open Market Committee (FOMC) meeting, where Chairman Powell hinted at a possible extension of the rate hike cycle, while the Consumer Price Index (CPI) rose 3.2% in July, the first increase in 12 months, further exacerbating the downward pressure on the market.
The Bitcoin sell-off wiped out a total of $4 billion in open interest value.
Bitcoin prices have been range-bound between July and mid-August, along with a strengthening of the US dollar index. However, the release of the July FOMC meeting minutes on August 16 triggered a sell-off in the cryptocurrency market. In the minutes, the Fed stated that they would maintain a tight monetary policy until there are clear signs of inflation control. This led to the liquidation of more than $150 million in long positions, and a total decline in the value of open interest of about $5 billion. The deleveraging event also caused the funding rate to turn negative. It is worth noting that despite the pause in the sell-off at $26,000, the funding rate has returned to neutral levels, while the total open interest value has remained relatively stable, indicating that there is still uncertainty in the market.
Clearing Order Flow
Between 21:41 and 21:45 (UTC) on August 17, a series of liquidation events occurred. The Binance exchange’s perpetual contract market experienced a clear sell-side bias, causing the price of the Bitcoin perpetual contract market to deviate from the price of the BTCTUSD spot market during the liquidation period. In addition, at 21:45, the price of the Bitcoin perpetual contract fell below the previous low ($24777), which was 11:17 on June 15 (UTC). The entry of speculative buyers can clearly be seen from the skew in the buying and selling ratio. market. Notably, the spot price did not reach the previous low of 11:17 (UTC) on June 15 ($24,720).
Total liquidation heat map (Hyblockcapital)
According to the Hyblockcapital Total Liquidation Heatmap as of August 23, there are still a large number of significant liquidation orders with a value between $22,000 and $25,000. These orders are triggered when the market price reaches or falls to a specified level, causing their positions to be automatically liquidated. The existence of these large liquidation orders indicates that there is considerable selling pressure in the market, especially in the $22,000 to $25,000 range. It is important to note that this information is based on the Hyblockcapital Total Liquidation Heatmap provided, which represents a snapshot of market conditions at a specific point in time. Market dynamics change rapidly, so traders and investors need to pay close attention to any updates in the market or changes in the order book.
Disclaimer:
The information, opinions, estimates and forecasts contained in this cryptocurrency market review (collectively, the "Information") are provided by LIQUIDITY TECHNOLOGIES INC. (the "Company"). The Information is provided for informational purposes only and is not intended to provide investors with any formal understanding or recommendation. The Company has made reasonable efforts to ensure the accuracy and validity of the information provided, but does not make any guarantee as to its accuracy or completeness. The financial opinions expressed reflect the judgment of the author as of the date of publication and are subject to change without notice. This Information should not be construed as an offer or solicitation to buy, sell or trade any cryptocurrency, security or financial instrument. It does not take into account the personal investment objectives or situation of any reader. Cryptocurrencies are highly volatile and complex products and are subject to significant risks, including the risk of sudden and large price fluctuations. Investors in cryptocurrencies do not have any legal liability protection in the event of bankruptcy of the Company. Investors whose value of cryptocurrencies may be affected by changes in currency exchange rates, regulatory intervention or other political and economic developments should be aware that the value of their investment may decline and they may not be able to recover. Any historical information contained in this information is based on our own analysis and is provided for illustrative purposes only. Past performance is not an indicator of future results and results may vary. In no event shall the Company, its directors, employees, agents, partners, suppliers or affiliates be responsible or liable for any indirect, incidental, special, consequential or punitive damages, including but not limited to loss of profits, data, use or other intangible losses, arising out of the use of this information. The Company reserves the right to modify, change, add or delete portions of this information at any time and for any reason without prior notice.