Bitcoin Plunges Below $29K, Liquidating 54,799 Traders

In Monday's trading session, the cryptocurrency market witnessed a significant decline, resulting in more than $164 million worth of crypto assets being liquidated within 24 hours. Notably, Bitcoin's price registered a 3% drop, dipping to $28,900 levels before slightly recovering to approximately $29,280. Throughout the day, the price of BTC oscillated between a low of $29,068 and a high of $30,330. Within the past 24 hours, a significant number of traders, totaling 54,799, experienced liquidation, resulting in a collective liquidation amount of $164.42 million. Notably, the largest liquidation order involved OKX-BTC-USDT-SWAP, which amounted to $2.57 million.

Impact of Global Economy and Interest Rate Decisions on Crypto Trading

The liquidation of long positions in the crypto market coincided with a surge in the US Dollar Index (DXY) value, which rose to 101.25. This surge prompted corrections in the prices of both Bitcoin and Ethereum. Traders are advised to closely monitor the DXY for any significant macro events that may unfold during the week, as it could potentially lead to a directional shift after a volatile period.

Furthermore, concerns about a slowing global economy and the potential for a recession caused global bond yields to fall, with the 10-year US Treasury yields dropping to 3.81% by the end of July's first week. Traders are now preparing for crucial interest rate decisions from prominent central banks, including the US Federal Reserve, European Central Bank (ECB), and Bank of Japan.

According to the CME's FedWatch tool, there is a staggering 99.8% probability of a 25-basis-point rate hike at the upcoming July 26 FOMC meeting, which would place the Fed Funds rate between 525 and 550.

In light of recent market dynamics, analysts from Glassnode revealed an intriguing finding in their latest edition of "The Week On-Chain" newsletter. Contrary to popular belief, opportunistic entities are identified as the most active whales in the crypto space. The data shows that short-term holders (STH) have become more prevalent, defined as investors who hold their coins for up to 155 days.

In fact, the dominance of short-term holders in currency flows has reached a remarkable 82%, surpassing the long-term range of the past five years, which typically ranged from 55% to 65%. This insight indicates that a significant portion of current trading activity can be attributed to these short-term holders, including those categorized as whales, who play a prominent role in the 2023 market.

Interest in BTC/USD's short-term movements has been evident even before May, especially after the FTX crisis in late 2022. As speculators become more inclined to capitalize on market volatility, both in upward and downward trends, the influence of short-term holders has become more pronounced.

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