SimonaD
Stablecoin supply ratio in correlation with other metrics
The stablecoin supply ratio (SSR), defined as a ratio of the market cap of BTC divided by the market cap of all stablecoins, shows the buying power of stablecoins over the Bitcoin supply. SSR shows the level of exchange activeness and volatility, as follows: increasing trend show slowing down status of stablecoin's buying power (bearish or sideways sentiment) and decreasing trend mean rising status of stablecoin's buying power (bullish). Trading volume is one of the most important and crucial metric to determine the flow of an asset. Volume may not provide a complete picture of trading activities in the market as does not include OTC (over-the-counter) transactions but it is still a very useful metric to inform us about price movements, buyer's interest and especially the asset' liquidity. Since the end of March, we can see in the chart that the trading volume has registered a decrease and SSR a stagnation, while we have an increase in the circulating supply of the stablecoin Tether (the largest stablecoin in terms of volume), followed by an increase of Bitcoin's price. A possible interpretation would be that big investors have stocked up on stablecoins and are waiting for better prices. The recently increase in the price of Bitcoin may actually be the result of a rotation of the money already existing in the market. A low SSR means there is high purchasing power for Bitcoin, which means there is the potential to see a bullish trend when the big buyers will re-enter the market to buy.