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Bitcoin Bull

Bitcoin Stablecoin Supply Ratio Now Forms A “Buy” Signal

Hououin Kyouma by Hououin Kyouma
9 months ago
in Bitcoin
Reading Time: 3 mins read

On-chain data shows the Bitcoin stablecoin supply ratio is now showing a green signal that has proved to be profitable for the crypto several times in the last two years.

Bitcoin Stablecoin Supply Ratio Shock Momentum Forms “Buy” Signal

As pointed out by an analyst in a CryptoQuant post, out of the 11 previous such buy signals, 10 ended up profitable for the crypto.

The “stablecoin supply ratio” (or the SSR in brief) is an indicator that measures the ratio between the market cap of Bitcoin and that of all stablecoins.

Generally, whenever investors want to avoid volatility associated with cryptos like BTC, they shift their coins into stablecoins. Once they feel that prices are right to re-enter the markets again, they buy back into them. As such, the total stablecoin supply can be looked at as potential buying pressure for other cryptos.

When the value of the SSR is high, it means the BTC supply is higher compared to the stablecoin cap, and thus there is low buying pressure in the market currently.

Related Reading: On-Chain Data Shows Bitcoin Whale Dumping Behind Dip Below $19k

On the other hand, low values of the indicator suggest there is high potential dry powder in the market right now. Because of this, such a trend can 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 is a chart that shows the trend for it over the past couple of years:

Bitcoin Stablecoin Supply Ratio

Looks like the value of the metric has been low in recent days | Source: CryptoQuant

As you can see in the above graph, the quant from the post has marked the relevant points of trend for the Bitcoin SSR shock momentum.

It seems like whenever this metric has made a low below the green dotted level, the price of the crypto has observed a buy signal.

Related Reading: WATCH: Bitcoin, Wyckoff Theory, And The Composite Man | BTCUSD September 8, 2022

During the last two years, there have been eleven instances of this pattern taking place, out of which only one has turned out to be a false signal.

Most recently, the indicator has once again showed this formation. If the past trend is anything to go by, then this may turn out to be bullish for Bitcoin.

BTC Price

At the time of writing, Bitcoin’s price floats around $20.9k, up 4% in the past week. Over the last month, the crypto has lost 12% in value.

The below chart shows the trend in the BTC price over the last five days.

Bitcoin Price Chart

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
Tags: bitcoinBitcoin Buy SignalBitcoin SSRBitcoin Stablecoin Supply Ratiobtcbtcusd
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Hououin Kyouma

Hououin Kyouma

Kyouma is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021. Kyouma has been writing for many years, first as a hobbyist and later as a freelancer. He obtained a bachelor's in physics in 2022 and is planning on starting a master's in the same field in the near future. Kyouma is enthusiastic about the cryptocurrency industry and holds an active interest in on-chain analysis. His hobbies include gaming, anime, and football. You can find Kyouma on Twitter at @Kyouma29.

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