Bitcoin (BTC) trimmed some of the gains, dropping below $ 60,000 on March 14, a day after hitting a new all-time high of $ 61,950 on Binance.. However, the data on the chain indicates that the uptrend is likely to continue in the short term.
The main metric that indicates a short-term bullish trend in Bitcoin’s price is Increase stable currency deposits on stock exchanges.
Although higher funding rates and a saturated market set the price back, Marginalized capital flows into the cryptocurrency market could further boost Bitcoin’s momentum.
Why has the Bitcoin price fallen after a $ 60,000 rally
When Bitcoin enters the price search process and reaches a new high, interest in the market naturally rises..
In today’s market – which has been rated very attractive or “sexy” There is a lot of liquidity, which makes it an ideal period for high net worth investors to capitalize on their positions.
Bitcoin financing rates. Source: Bybt.com
A trader and technical analyst working under the alias Filbfilb noticed this High funding rates were spotted in the futures market and Bitcoin deposits on exchanges before the crash.
Bitcoin futures market uses a mechanism called “funding” To motivate traders on the basis of market equilibrium.
For example, If there are more buyers or holders of long contracts in the bitcoin futures market, short sellers are incentivized to sell or short sell.. When this happens, the funding rate increases, making it costly for traders to enter long Bitcoin trades.
Before the crash, BTC’s futures funding rate was between 0.05% and 0.1%, which is five to ten times higher than the default funding rate of 0.01%.. Filbfilb explained:
“The temporary sale of Bitcoin after high financing, large net flows of Bitcoin, and pumping at the end of the week. I think people thought this time was different.”
Rising bitcoin flows to exchanges likely fueled the decline because whales often deposit bitcoin on exchanges when intending to sell.
So, The combination of selling pressure from whales and a higher rate of forward financing was the likely reason behind today’s pullback.
How Stable Currency Inflows Can Spur Bitcoin Prices
But even though the march was halted, Stablecoin entries are on the exchanges again, According to the latest data from CryptoQuant.
In the cryptocurrency market, traders often hedge their holdings using stable currencies such as Tether (USDT) and USDC, rather than withdraw money through bank accounts.
user, Exchanges have a processing period of three to seven days for cash deposits, And when tRadars want to re-enter the cryptocurrency market, and transferring cash from their bank accounts to exchanges becomes a difficult task.
BiTC exchange reserve (blue), and stablecoin entries (green) vs. BTC price (yellow). Source: CryptoQuant
So, When stablecoins start flowing back to the exchanges – As seen on the green peaks in the chart above – It indicates that unserved capital may be looking to return to Bitcoin.
Ki Yong Ju, CEO of CryptoQuant writes:
“There have been a lot of stable currency flow transactions to exchanges and oftentimes. Between 100 and 287 stable deposits per ETH block (15 seconds). I think we’ll see more pumping in $ BTC or $ ETH in the short term.”
Throughout the past week, The only component missing during the rise of Bitcoin is stable currency flows.
When the bitcoin price bounces without a noticeable increase in stable currency flows, the likelihood of an unsustainable uptrend and a short-term correction increases..
If the marginalized capital trend returns to the cryptocurrency market, there is a good chance that it will increase bitcoin’s momentum., Which will lead to a wider height.
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