After reaching a yet new All-Time High on Sunday, the Crypto market leader dipped below $60,000, but the only comfort to investors is that it doesn’t affect the inflow of the stablecoins.
After reaching a new ATH of $61,950 on Sunday on Binance, Bitcoin’s price dropped afterward. There are still indicators from the on-chain data that in just a short while, the long-term bullish trend will continue.
One of the metrics used in ascertaining that the drop is a short-term one is that there is an increase in the deposits of the stable coins to the exchanges.
Though it is understood that having an overcrowded market and very high deposits in the market might cause the price of cryptos to retrace, but this time, injecting sidelined capital into the cryptocurrency market can be very helpful in the BTC Bullish momentum.
Explanation to why BTC dropped after reaching a New All-Time High
When BTC set a new record price, there was a spike in the market interest. But that moment was the ideal moment for investors with a high stake and big whales to take their profits on the opened positions because of the liquidity in the recent red market.
A technical analyst and trader that goes by the pseudonym FilbFilb cited that he had noticed the deposits of BTC in exchanges and the high rates in futures market funding just before the price of BTC dropped.
The market of the BTC futures uses a setup named “Funding” to accord incentives to its traders following the balance of the market. An instance is if there are many bulls in the BTC futures market, the bears will receive incentives to pull the market back by going short, and at this instance, the funding rate will increase, which will make it expensive and hard for bulls to enter the market again.
FilbFilb then noted that the high inflows into the BTC exchanges are what that cause the drop as there is dumping of BTC from Whales to the exchanges, which signify an intention to sell.
How Stablecoins will help BTC grow more
It takes close to seven days sometimes for exchanges to process cash deposits and how cumbersome it is to move cash from the bank to exchanges. Investors began to look towards buying stablecoins instead like the USDC and USDT, which shows that they still have interest in buying BTC.
This process signals a spike in the stablecoins’ market, but the continuation of the sidelined funds entering the cryptocurrency market again shows a very high probability that the momentum BTC will gain as a result will cause a bigger rally.