Bitcoin (BTC) leveled some gains and fell below $ 60,000 on March 14, the day after setting a new historical maximum $ 61,950 in Binance. However, on-chain data suggests that the uptrend is likely to continue in the near future.
One of the key metrics that signals an optimistic short-term trend for bitcoins is an increase in stable deposits in stock exchanges.
Although the high level of funding and the crowded market cause the price to recede, the entry of ancillary capital into the crypt market can continue strengthen the dynamics of bitcoins.
Why bitcoins dropped after breaking $ 60K
When bitcoin enters pricing and sets a new record, market interest will naturally increase.
There is a lot of liquidity in today’s hot market, which is an ideal time for whales and high net worth investors to profit from their positions.
Filbfilb, a pseudonymous trader and technical analyst, noted that high levels of market futures financing and stock exchange bitcoin deposits were recorded before the decline.
The bitcoin futures market uses a mechanism called “financing” to motivate traders based on market equilibrium.
For example, if there are multiple buyers or holders of long contracts in the bitcoin futures market, short sellers are motivated to sell or short sell. When this happens, the funding rate will increase, making bitcoins more expensive for traders.
Prior to the decline, BTC futures funding rates ranged from 0.05% to 0.1%, which is five to ten times higher than the initial funding rate of 0.01%. Filbfilb explained:
“Temporary sale of bitcoins after high funding, a large net inflow of BTC and a weekend pump. People probably thought it was different this time. “
The high influx of bitcoins on the stock exchanges is likely to have caused a decline, as whales often put BTC on the stock exchanges when they intend to sell.
The combination of selling pressure from whales and high levels of futures funding was therefore a likely reason for today’s retreat.
How stable tides can further promote BTC rallies
But despite stopping the rally, the influx of stabilcoins on the stock market according to the latest data from CryptoQuant.
In the crypt market, traders often secure their stakes against stablecoins such as Tether (USDT) and USDC, rather than collecting withdrawals into bank accounts.
Exchanges usually have a processing period of three to seven days for cash deposits, and when traders want to re-enter the cryptocurrency market, moving cash from their bank accounts back to the exchanges becomes cumbersome.
Therefore, when stablecoins begin to flow back into the exchange offices – as can be seen on the green tips in the chart above – it suggests that ancillary capital may be trying to get back into bitcoins.
Ki Young Ju, CEO of CryptoQuant, wrote:
“Many transactions with stablecoins have very often entered the stock exchanges. 100-287 stablecoins are stored in each ETH block (15 seconds). I think we will see more $ BTC or $ ETH pumps in the short term. “
Over the past week, one of the missing components during the bitcoin rally was the influx of stablecoins.
When bitcoins accumulate without a noticeable increase in the influx of stablecoins, it increases the likelihood of an unsustainable uptrend and short-term correction.
If the trend of moving capital back to the crypt market continues, there is a high probability that it will further support the dynamics of bitcoin, which will lead to a wider rally.