Stable coins have never had more purchasing power than they do now, which could be a good sign for the next rally.
Glassnode tracks the stablecoin supply ratio (SSR), which is calculated by dividing the market cap of Bitcoin (BTC) by the market cap of all major stablecoins. A low SSR indicates that stall coins have more purchasing power, which the company says could be interpreted as a bullish sign.
SSR = BTC market cap / stablecoin market cap
SSR, Bitcoin price and market cap. Source: Glassnode
This ratio is currently a little over 15, which means that stablecoins could theoretically buy about a fifteenth of all Bitcoin.. As a reference, this quota was 88 in March 2018. Therefore, the purchasing power of stable coins increased more than six times in just over two years.
Increase in stall coins and bitcoin stagnation
What is to blame for this drastic change since the relationship has two components? – look at the graphic, It is very clear that the radical change is mainly due to the growth of stable currencies. BTC’s market cap at the time was $ 195 billion, currently $ 171 billion, a decrease of 12%. In the meantime, the capitalization for stable coins has increased from USD 2.2 billion to USD 11 billion, which corresponds to growth of 500%.
Stable coins are a convenient tool for traders and investors. It allows them to park their crypto assets on stable assets without withdrawing money and leaving the cryptocurrency ecosystem. A recent study found that exchanges that support BTC-USDT pairs have more “whale” trades than exchanges that support BTC-USDT pairs.
Although the market capitalization of stall coins has risen rapidly, the price of BTC has not kept pace. The correlation between SSR and Bitcoin price seems to have broken down around Black Thursday. It remains to be seen whether stable coin growth will be the next upward trend. However, should this recovery occur, the maturity of the stablecoin area should offer market participants more efficient mechanisms.