Understanding the Market Sell-Off
Bank of Japan Holds Steady
In the midst of market turbulence, the Bank of Japan (BOJ) has opted to keep interest rates unchanged for the remainder of the year, though a potential rate hike could occur next March. This decision has stirred panic, particularly affecting Yen carry trades, which have a history of contributing to global market instability. As traders prepare for continued volatility, speculation about the BOJ’s future actions is fueling increased Fear, Uncertainty, and Doubt (FUD) in the market.
Rising Geopolitical Tensions
US Inflation Data Takes Center Stage
This week, key U.S. economic indicators will come under close scrutiny. Data on the Producer Price Index (PPI), Consumer Price Index (CPI), Initial Jobless Claims, and Retail Sales will be released on Tuesday, Wednesday, and Thursday.
A Bloomberg survey suggests that the Federal Reserve might cut interest rates by 25 or 50 basis points in September, depending on the data. These potential moves could either stabilize or further unsettle crypto markets, depending on how inflation trends.
It’s Getting Tough! More Crashes to Come?
Bitcoin is currently grappling with significant liquidity challenges, which could lead to short-term market fluctuations. The BTC Liquidity/OrderBook Heatmap suggests potential further declines, possibly down to $56,800. The market is also wary of a potential “death cross,” a technical pattern that might trigger additional sell-offs.
The risk of large-scale liquidations is high, with around $2 billion in Bitcoin longs at risk if the price falls below $58,600. Over the past 24 hours, more than 61,000 traders have faced liquidation, with total liquidations surpassing $166 million across major cryptocurrencies. Notably, OKX saw a significant liquidation of an ETH trade worth $2.17 million.