The high purchasing power of the stablecoins could predict the next Bitcoin rebound

Stablecoins have never had more buying power than now, and this could augur well for the next upswing.

Glassnode tracks the supply ratio of stablecoins, or SSR, which is calculated by dividing Bitcoin’s market capitalization (BTC) by the market capitalization of all major stable currencies. A low SSR indicates that stable currencies have more purchasing power, which according to the company could be interpreted as an upward sign.

Tether exceeds USD 10 billion, moving to other competing stablecoins

This ratio is currently at just over 15, which means that, in theory, stable coins could buy about one-fifth of all Bitcoin. For reference, in March 2018, this ratio stood at 88. Therefore, in just over two years, the buying power of stable coins increased more than sixfold.

OKEx recorded more than 8,000 Bitcoin ‚whale‘ transactions in June
Increased stablecoins and stagnation of Bitcoin
Since the relationship has two components, what is „to blame“ for this drastic change? – Looking at the graph, it is very clear that the dramatic change is mainly due to the growth of stable currencies. The market capitalization of BTC at that time was USD 195 billion, now it is USD 171 billion, a decrease of 12%. Meanwhile, the capitalization for stable currencies has increased from USD 2.2 billion to USD 11 billion or 500% growth.

Stablecoins represent a convenience vehicle for traders and investors. It allows them to park their crypto assets in stable assets without the need to withdraw money and leave the cryptomoney ecosystem. A recent study found that exchanges that support BTC-USDT pairs record more „whale“ trades than those that support BTC-USD pairs.

Where does the price of Bitcoin go? The current stablecoin period emulates that of early 2017
Correlation break

Although the market capitalisation of stable currencies has increased rapidly, the price of BTC has not kept pace. The correlation between the SSR and the price of Bitcoin Rejoin seems to have collapsed around Black Thursday. It remains to be seen whether the growth of stable currencies will become the next upward trend. However, if this rebound occurs, the maturity of the stablecoins space should provide more efficient mechanisms for market participants.