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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. The CEO of CryptoQuant, Ki Young Ju left a message: "There were a lot of stablecoin transactions flowing into exchanges very frequently.
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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 this happens, the funding rate increases, making it more expensive for traders to hold Bitcoin.Before the drop, the futures funding rate was hovering in the range of 0.05% to 0.1%, which is five to ten times higher than the default funding rate of 0.01%.
"Bitcoin temporarily selling off after big net inflows and weekend pump followed by high funding."
The people felt like things would be different this time.
Filbfilb, a pseudonymous trader and technical analyst, noted that high futures market funding rates and Bitcoin deposits into exchanges were spotted before the drop.
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For example, if there are more buyers or long contract holders in the Bitcoin futures market, short-sellers are incentivized to sell or short. Source: CryptoQuantThe fact that stablecoins are beginning to flow back into exchanges can indicate that sidelined capital may be coming back to Bitcoin.
Ki Young Ju, CEO of CryptoQuant, stated: "There were lots of stablecoins going to new exchanges very frequently. Filbfilb explained:
"Bitcoin temporary selloff after high funding, big net BTC inflows and weekend pump. Guess people thought it was different this time."
If sidelined capital moves back into the crypto market, there's a high probability that the rise in Bitcoin's momentum will result in a broader rally.
The following sentence applies.
On March 14, Bitcoin (BTC) dropped below $60,000, a day after it hit a new all-time high of $61,950 on Binance.
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.
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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.
Ki Young Ju, the CEO of CryptoQuant, wrote:
"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."
Throughout the past week, the one missing component during the Bitcoin rally was stablecoin inflows.
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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.
