Quant Explains How Stablecoin Ratio Can Give Bitcoin Buy Or Sell Signals
24 Marzo 2022 - 1:00PM
NEWSBTC
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. Related
Reading | Bitcoin Bullish Signal: Exchange Reserve Loses
Another 50k BTC Over Past Week 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. Related
Reading | Small Cap Altcoins Continue To March Ahead Of
Bitcoin And Ether Gains 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
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