On-chain data shows that the supply ratio of Bitcoin stablecoin is now showing a green signal that has proven profitable for the crypto multiple times over the past two years.
- Advertisement -
Bitcoin Stablecoin Supply Ratio Shock Momentum Forms “Buy” Signal
As noted by an analyst in a CryptoQuant afterout of the 11 previous such buy signals, 10 were profitable for the crypto.
the “supply ratio of stablecoin” (or the SSR for short) is an indicator that measures the ratio between Bitcoin’s market capitalization and that of all stablecoins.Generally, when investors want to avoid the volatility associated with cryptos like BTC, they move their coins to stable coins. Once they feel the prices are right to re-enter the markets, they buy back into it. As such, the overall stablecoin supply can be seen as potential buying pressure for other cryptos.When the value of the SSR is high, it means that the BTC supply is higher compared to the stablecoin cap, thus there is currently low buying pressure in the market.
On the other hand, low readings of the indicator suggest that there is a high potential dry powder in the market right now. Because of this, such a trend could be bullish for the price of Bitcoin.Now there is a metric called the Bitcoin SSR “shock momentum”, which tracks the rate of change in its value. Here’s a chart showing the trend over the past few years:
Looks like the value of the metric has been low in recent days | Source: CryptoQuant
As you can see in the chart above, the quantity of the post has marked the relevant trend points for the Bitcoin SSR shock momentum.It seems that when this stat has bottomed out below the green dotted level, the price of the crypto has observed a buy signal.In the past two years, there have been 11 instances of this pattern occurring, only one of which turned out to be a false signal.Most recently, the indicator has shown this formation again. If the past trend is something to get past, then it could turn out to be bullish for Bitcoin.
BTC price
At the moment of writing, The price of Bitcoin is floating around $20.9k, up 4% over the past week. In the past month, the crypto has lost 12% in value.
The chart below shows the trend in BTC price over the past five days.
The value of the crypto seems to have spiked up over the past day | Source: BTCUSD on TradingView
Featured image from Quaritsch Photography on Unsplash.com, charts from TradingView.com, CryptoQuant.com
