After reaching, once again, a new all-time high, Bitcoin dropped below $60,000 today, raising a few question marks. However, analysts believe that this shouldn’t be such a big concern. In fact, the situation should be regarded as good news!
Specifically, we’re talking about one key metric that hints at an optimistic short-term trend for the biggest cryptocurrency on the market, as the stablecoin deposits into exchanges kept growing. Yes, both high funding rates, as well as what we can call an overcrowded market are pulling the price back right now, but the recent entrance of sidelined capital into the crypto market can have a positive impact on Bitcoin’s price.
What caused the drop
Simply put, when BTC enters price discovery and manages to reach a new record high, the market reacts and the interest grows, as more people buy. And the same happened over the last few days. This means that there was – and still is – a lot of liquidity in the market, making it a great moment for whales or powerful investors to make some profit out of their positions.
This means that most exchanges dealt with some high Bitcoin flows, this being a very important factor behind the drop. Combined with the selling pressure, it’s not that difficult to understand the price drop.
A new rally, coming soon?
Despite today’s drop, there was still an increased stablecoin inflow into exchanges. Usually, in the crypto market, traders hedge their holdings against stablecoins instead of cashing out to bank accounts.
Considering that exchanges have a processing period for cash deposits that can extend up to seven days, when traders want to re-enter the crypto market, moving cash from their accounts back to exchanges becomes cumbersome. This triggers stablecoins, which begin flowing into exchanges again.
“There were many stablecoins inflow transactions to exchanges very frequently. 100-287 stablecoins deposits in each ETH block )15 seconds). I think we’ll see more pumps on $BTC or $ETH in the short-term,” believes Ki-Young Ju, CEO of CryptoQuant.