Bitcoin dropped below $60,000 on Sunday after new all-time highs, but stablecoin inflows show this is not a big concern.
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.Why Bitcoin dropped after $60K breachWhen 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.Bitcoin funding rates. Source: Bybt.comFilbfilb, a pseudonymous trader and technical analyst, noted that high futures market funding rates and Bitcoin deposits into exchanges were spotted before the drop.The Bitcoin futures market uses a mechanism called “funding” to incentivize traders based on the balance of the market.For example, if there are more buyers or long contract holders in the Bitcoin futures market, short-sellers are incentivized to sell or short. When this happens, the funding rate increases, making it expensive for traders to long Bitcoin.Before the drop, the futures funding rate of BTC was hovering in …
Story continues on Cointelegraph
Menu