An indicator that has historically marked major price bottoms is pointing to a renewed flow of capital into bitcoin.
The stablecoin supply ratio oscillator created by analyst Willy Woo and tracked by blockchain analytics firm Glassnode has risen from a 12-month low of -2.6 to -1.9 in the past four weeks.
The recovery indicates capital has been flowing from stablecoins into bitcoin, Glassnode tweeted Thursday. In other words, bargain hunters look to have employed stablecoins to buy the dip in bitcoin and broader crypto markets.
Stablecoins are cryptocurrencies with value tied to an external reference like the U.S. dollar. They are essentially proxies for fiat currencies, offering a price-stability advantage that other digital assets do not have, and are widely used to fund crypto purchases. The total market capitalization of stablecoins has surged 10-fold year-over-year to more than $100 billion, according to Messari.
The stablecoin supply ratio (SSR) is the ratio of the bitcoin supply and the stablecoin supply denoted in BTC. “When the ratio is low, the buying power for bitcoin is high, as the same amount of USD can buy relatively more BTC. Conversely, a high ratio means fiat has the weak buying power,” Glassnode said in the explainer blog post.
The stablecoin supply ratio oscillator helps traders identify extreme readings on the SSR and any impending trend change. The metric, however, doesn’t consider the fiat-based trades or bitcoin derivatives and is not a perfect indicator.
Nevertheless, it has proved to be a reliable indicator of changes in the past.
For example, bitcoin’s previous bull runs, including the one seen in the final quarter of 2020, kicked off with a below -2 reading on the oscillator. So, the recent recovery could be a signal of an impending change of fortunes for bitcoin and broader crypto markets.
Bitcoin is currently trading near $31,789, representing a Key Indicator Shows Renewed Inflow Of Capital Into Bitcoin8.47 percent drop in the last 24 hours. The leading cryptocurrency fell sharply in mid-May and has been restricted mainly to the $30,000 to $40,000 range ever since, barring the temporary dip to $29,000 earlier this week.
The market capitalization of tether (USDT), the largest stablecoin, has increased from $59 billion to over $64 billion in the past four weeks.
Bitcoin Bulls Run Amok: Short Traders Hit with $90 Million Loss Amidst Unstoppable Surge
The relentless surge in Bitcoin’s prices has left short traders reeling as highly leveraged futures bets against the cryptocurrency incurred losses totaling $90 million on Tuesday alone.
This follows an additional $70 million in short liquidations on Monday, contributing to Bitcoin’s remarkable climb from $39,000 to $44,000 this week.
According to data from CoinGlass, most of these liquidations transpired on major crypto exchanges, including Binance, OKX, and Huobi.
The substantial liquidation figures have the potential to signal either a local top or bottom in a significant price movement, providing valuable insights for traders looking to strategically position themselves.
The surge in trading volumes, up by 25% in the past week, coupled with the growth in open interest from $17.2 billion to $20.2 billion since the beginning of December, underlines the increased market activity around Bitcoin.
Several factors are contributing to Bitcoin’s recent growth. Optimism is swirling around the potential approval of a spot exchange-traded fund (ETF) in the U.S., with traders factoring in anticipated rate cuts, buoying riskier assets like technology stocks and Bitcoin.
Additionally, the possibility of sovereign adoption is gaining traction as leaders in major economies express a Bitcoin-friendly stance.
Over the weekend, a notable group of traders committed to a $200 million BTC futures position, emphasizing the sustained demand for exposure to Bitcoin.
Amid continuous updates and changes in spot ETF applications, some industry observers foresee Bitcoin prices surpassing the $48,000 level in the coming weeks, further intensifying the cryptocurrency’s bullish momentum.
Bitcoin Surpasses $42,000 Mark, Ethereum Follows Suit, Triggering Crypto Rally
Bitcoin Breaks $40,000 Price Levels Amidst Optimism and Regulatory Developments
Bitcoin on Monday broke $40,000 resistance levels following a 2.9% surge in price to $40,867 per coin.
The world’s largest digital currency has now appreciated by 146% in 2023 as more institutional investors continue to increase their investments in the unregulated cryptocurrency space.
Investors are exhibiting growing confidence in the Federal Reserve’s apparent conclusion of rate hikes amid a cooling inflation backdrop.
This shift in sentiment has redirected attention to the anticipated extent of rate cuts in the coming year, prompting a rally across global markets.
The cryptocurrency industry is currently in anticipation as regulatory decisions, particularly regarding applications for the first US spot Bitcoin exchange-traded funds (ETFs), hang in the balance.
Bloomberg Intelligence anticipates the approval of a batch of these ETFs by the Securities & Exchange Commission (SEC) by January.
“Bitcoin continues to be supported by optimism around SEC approval for an ETF and Fed rate cuts in 2024,” noted Tony Sycamore, a market analyst at IG Australia Pty.
Technical analysis points to $42,330 as the next significant level to monitor in Bitcoin’s upward trajectory.
Despite recent crackdowns in the industry, including legal actions against figures like Sam Bankman-Fried and Binance, Bitcoin has proven resilient.
Optimists argue that these regulatory measures, alongside the potential approval of ETFs, signify the maturation of the crypto industry and the prospect of a broader investor base.
According to Su Yen Chia, co-founder of the Asia Crypto Alliance, recent enforcement actions “have instilled confidence among investors,” noting that Bitcoin is aligning with momentum in traditional finance as expectations of Fed rate hikes fade.
Business3 weeks ago
Nigeria’s Logistics Sector Holds Untapped N3tn Potential, Says Courier and Logistics Management Institute
Black Market Rate3 weeks ago
Black Market Exchange Rate Today 14th November 2023
News4 weeks ago
Millionaire Powerplay Limited Unveils Unprecedented Odds in American Lotto’s Instant Cashless Payout
Black Market Rate4 weeks ago
Black Market Exchange Rate Today 9th November 2023
Forex3 weeks ago
Black Market Exchange Rate Today 16th November 2023
Forex4 weeks ago
Black Market Exchange Rate Today 10th November 2023
Forex4 weeks ago
Black Market Exchange Rate Today 8th November 2023
Black Market Rate2 weeks ago
Black Market Exchange Rate Today 21st November 2023