According to on-chain data, the Bitcoin stablecoin inventory ratio now shows a green sign. The crypto has proven profitable many times over the course of the last two decades.
Bitcoin Stablecoin Supply Ratio Shock Momentum Forms “Buy” Signal
CryptoQuant analyst points out that of the previous 11 buy signals for crypto, only 10 were profitable.
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.
In general, investors will shift their cryptos into stablecoins if they want to minimize volatility with cryptos like BTC. When they believe the market is ready to be re-enter, they will buy back in. The total supply of stablecoins can thus be considered as potential buying pressure to other cryptos.
If the SSR value is high it indicates that the BTC supply exceeds the stablecoin cap. This means there is less buying pressure on the market.
However, low levels of this indicator could indicate high amounts of potential dry powder in today’s market. This can make Bitcoin’s price bullish.
Now, there is a metric called the Bitcoin SSR “shock momentum,” which tracks the rate of change in its value. This chart shows how it has changed over the last couple years.
It seems like the value for the metric is low these days. Source: CryptoQuant| Source: CryptoQuant
The graph above shows that the Quant from the Post has highlighted the key points for Bitcoin SSR shock momentum.
This metric seems to have a tendency to show a buy signal whenever it reaches a level below the green dots.
In the past two years there were eleven cases of this pattern, of which one was a false sign.
This formation has been seen again recently by the indicator. If this trend continues, it could prove to be bullish in Bitcoin.
BTC Prices
At the time of writing, Bitcoin’s price floats around $20.9k, up 4% in the past week. The crypto’s value has fallen 12% over the past month.
Below chart displays the BTC Price Trend over the Last Five Days.
Cryptocurrency seems to be gaining in value over the last day. Source: TradingView - BTCUSD| Source: BTCUSD on TradingView
Quaritsch Photography featured image on Unsplash.com. TradingView.com charts, CryptoQuant.com charts.