Bitcoin (BTC) reduced some of its profits and fell below $ 60,000 on March 14, the day after reaching a new full-time high of $ 61,950 on Binance. However, the data along the chain indicate that the uptrend is likely to continue in the short term.
One of the main indicators indicating an optimistic short-term trend for bitcoin is the growth of stable foreign exchange deposits on stock exchanges.
While higher financing rates and market overload drive the price down, the entry of margin capital in the cryptocurrency market can increase Bitcoin’s momentum.
Why bitcoin fell after breaking through $ 60,000
When Bitcoin comes in contact with the open price and reaches a new all-time high, market interest naturally increases.
The current market has a lot of liquidity, which makes it an ideal time for whales and high-value investors to profit from their positions.
Philbfilb, a pseudonymous trader and technical analyst, noted that the rise in futures market financing rates and bitcoin deposits were seen before the downturn.
The futures market bitcoin uses a mechanism called “financing” to stimulate traders based on market weight.
For example, if there are multiple buyers or longholders in the Bitcoin futures market, card sellers have an incentive to sell or short-circuit. When this happens, the amount increases, making it more expensive for traders to buy bitcoins.
Prior to the cut, the future BTC financing rate ranged from 0.05% to 0.1%, which is five to ten times higher than the standard financing rate of 0.01%. Philbfilb explained:
“Temporary sale of bitcoins after high financing and large net bitcoin flows and output pump. People thought it was different this time. ”
The increase in bitcoin flows to stock exchanges probably triggered the recession because whales often put bitcoins on stock exchanges when they intend to sell.
Thus, pressure from whale sellers and a higher term financing rate were probably reasons for the current setback.
How stable currency flows can lead to Bitcoin’s rally
But even though the rally has stopped, stable currency flows to stock exchanges are increasing again, according to the latest data from CryptoQuant.
In the cryptocurrency market, traders often secure their assets against stack coins such as Tether (USDT) and USDC, instead of withdrawing money by withdrawing funds to bank accounts.
Stock exchanges usually have a processing time of three to seven days for cash deposits, and when traders want to re-enter the cryptocurrency market, it becomes cumbersome to transfer cash from the bank account to the stock exchanges.
Bitcoin exchange reserve (blue), stablecoin flows (green) against bitcoin price (yellow). Source: CryptoQuant
Therefore, when stack coins begin to flow back to the stock exchanges – as shown by the green collections in the chart above – it indicates that side-by-side capital may be looking to return to Bitcoin.
Ki Yong Joo, CEO of CryptoQuant writes:
“Very often there were many transactions on the flow of stable coins to stock exchanges. Deposits in 100-287 currencies are stable in each ETH block (15 seconds). I think we will see more pumping for BTC or $ ETH in the short term. ”
Over the past week, the only thing that has been missing during the Bitcoin rally is stable currency flows.
When bitcoin falls below a noticeable increase in stable currency flows, it increases the likelihood of an erratic bullish trend and short-term correction.
If the trend of margin capital returning to the cryptocurrency market continues, there is a good chance that it will strengthen Bitcoin’s speed, and lead to a broader rally.