Quant Explains How Stablecoin Ratio Can Give Bitcoin Buy Or Sell Signals

Keshav Verma

Last Updated: June 11, 2024 2:18 pm

3 mins read

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A quant has explained how the data of the stablecoin supply ratio (SSR) may be used to find Bitcoin buy or sell signals.

Stablecoin Supply Ratio May Be Able To Predict Bitcoin Buy And Sell Signals

As explained by an analyst in a CryptoQuant post, the stablecoin supply ratio may help us find BTC buy or sell signals.

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

In simpler terms, what this metric tells us is how the supply of the stablecoins compare with that of BTC. Investors usually use these fiat-tied coins when they want to escape volatile markets and hold on until the price reaches a viable reentry point.

So, in a way stablecoins represent potential dry powder for Bitcoin. When the value of the SSR is high, it means the supply of BTC is much higher than stablecoins right now. This means that there is lesser potential buying power available in the market and hence could be bearish for the price of the crypto.

On the other hand, low values of the ratio implies there is a decent amount of buying power available in the form of stablecoins at the moment. Naturally, this can be bullish for the value of BTC.

Now, here is a chart that shows the trend in the stablecoins supply ratio over the past 2 years:

The correlation between BTC price and the ratio | Source: CryptoQuant

In the above chart, the quant has marked the relevant regions of trend in the SSR RSI (a modified version of the indicator).

The analyst notes that whenever the value of this metric has been below 25, it has usually been a good buying point for Bitcoin.

On the other hand, values above 70 seem to have indicated a sell signal instead. A couple months back, the metric showed a buy signal, and has since been making its way up.

If past trend is anything to go by, the price of the crypto may surge up now and the indicator will show a sell signal near the top.

BTC Price

At the time of writing, Bitcoin’s price floats around $43k, up 5% in the last seven days. Over the past month, the crypto has gained 15% in value.

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

BTC's price seems to have surged up over the last couple of days | Source: BTCUSD on TradingView

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.