On-chain analysis: Stablecoin Supply Ratio (SSR) approaches record low, suggests local low for BTC

In this article, Bitcoin Magazine looks at Bitcoin (BTC) on-chain metrics, more specifically the Stablecoin Supply Ratio (SSR) and Tether (USDT) supply on exchanges, to determine the strength of buying stablecoins compared to Bitcoin ( BTC).

SSR

The SSR is an index that measures Bitcoin’s market capitalization in relation to total stablecoin supply to estimate purchasing power in the stablecoin market. It moves by changing the BTC price or the stablecoin supply.

Low values ​​suggest that stablecoins can buy a significant supply of BTC. For example, a value of 10 means that 10% of the offer can be bought with stablecoins (1/10).

Therefore, if the BTC price goes down, the SSR will go down. Conversely, even if the price of BTC stays the same, increasing the stablecoin supply will also cause the SSR to decrease.

The SSR hit an all-time low of 6 on June 8, meaning that stablecoin supply in the market can buy 16.66% (1/6) of the BTC supply.

More importantly, the SSR has fallen below the lower band of the Bollinger Band indicator (black circle) for the fourth time. In the last 3 incidents, this signal then led to a strong rally.

After recovering, the SSR is approaching June’s all-time low, currently at 6.52.

The source: Glass knot

The Bollinger Bands (BB) indicator has been pooling since the beginning of September. This happens when the value of the indicator remains constant over a long period of time.

A drop below the bottom band of the BB indicator (light blue line) can be a strong signal that BTC has bottomed out.

The source: Glass knot

USDT billion balance

The circulating supply of USDT (black) has been increasing steadily since September 2020. Over the past two months, that spike has been the catalyst for a slight decline in the SSR as the price of BTC has remained unchanged.

The USDT balance held on the exchanges is also gradually increasing, suggesting increasing purchasing power.

The source: Glass knot

However, the supply of USDT in smart contracts has declined since the beginning of October 2020.

This shows that many investors are transferring USDT to the stock market to bottom out, and not in smart contracts.

The source: Glass knot

You can see the BTC price here.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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