Bitcoin price dips below $60K — But here’s why a bigger rally may be brewing
March 15, 2021 @ 11:33 +03:00
Bitcoin (BTC) pared some gains, dipping below $60,000 on March 14, a day after setting a new all-time high of $61,950 on Binance. However, on-chain data indicates that the uptrend is likely to continue in the near term. One key metric that is signaling an optimistic short-term trend for Bitcoin is the rise in stablecoin deposits into exchanges. Although high funding rates and an overcrowded market are causing the price to pull back, the entrance of sidelined capital into the crypto market may further boost Bitcoin’s momentum. When Bitcoin enters price discovery and hits a new record-high, the interest in the market naturally spikes. There is a lot of liquidity in the current red-hot market, making it an ideal period for whales and high-net-worth investors to take profit on their positions.
But despite, the halt in the rally, stablecoin inflows into exchanges are rising once again, according to the latest data from CryptoQuant. In the crypto market, traders often hedge their holdings against stablecoins like Tether (USDT) and USDC, rather than cashing out via withdrawals to bank accounts. Typically, exchanges have a three to seven-day processing period for cash deposits, and when traders want to re-enter the cryptocurrency market, moving cash from their bank accounts back to exchanges becomes cumbersome. Hence, when stablecoins begin to flow into exchanges again — as seen by the green spikes in the chart above — it suggests that sidelined capital may be looking to get back into Bitcoin.
When Bitcoin rallies without a noticeable rise in stablecoin inflows, it increases the probability of an unsustainable uptrend and a short-term correction. If the trend of sidelined capital moving back into the crypto market continues, there is a high probability that this will further fuel Bitcoin’s momentum resulting in a broader rally.
Bitcoin price dips below $60K — But here’s why a bigger rally may be brewing, Cointelegraph, Mar 15