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Bitcoin (BTC) is at 17-month highs with simply 164 days till the subsequent Bitcoin halving occasion, alongside anticipation of a spot Bitcoin exchange-traded fund (ETF) approval within the coming months.
But, amid Bitcoin’s 106.38% year-to-date good points, the stablecoin provide fee oscillator (SSRO) has raised a significant flag regardless of suggesting the start of a brand new bull cycle.
Stablecoin shopping for energy weakens forward of Bitcoin ETF
This stablecoin provide ratio metric, which acts as an vital measure of the dominance of stablecoins vs. Bitcoin, has surged to a brand new all-time excessive at 4.13 on Oct. 25, in line with information from Glassnode. Such a surge hints at a big urge for food for Bitcoin accumulation on-chain.
Nonetheless, this additionally means that the buying energy of stablecoins is at a relative all-time low.
Traditionally, that is the very best SSRO divergence since 2019, when it rocketed as much as 4.12 on June 26 — precisely 320 days earlier than the Might 2020 halving.
The emergence of this similar high sign on the SSRO this week might, due to this fact, precede a retracement interval earlier than the subsequent halving occasion in April 2024.
Nonetheless, whereas the relative shopping for energy is presently weak — and an area high just like the one in 2019 is actually doable — the bigger implication is that prime SSRO ranges have additionally aligned with the begin of larger bull market cycles.
“Reserve danger” suggests this BTC rally could also be totally different
As a possible spot Bitcoin ETF approval tantalizes markets with implications for BTC’s worth, one metric is portray a singular picture of market sentiment, suggesting this Bitcoin rally may very well be totally different from 2019.
Particularly, the reserve danger (RR) indicator, which measures the risk-reward incentives in relation to the present “HODL financial institution” and spot BTC worth. As Glassnode places it:
When confidence is excessive and worth is low, there may be a pretty danger/reward to speculate (Reserve Danger is low). When confidence is low and worth is excessive then danger/reward is unattractive at the moment (Reserve Danger is excessive).”
When the SSRO accelerated to equally excessive ranges in June 2019, the RR adopted swimsuit, climbing above the inexperienced band, as proven within the chart above.
But, amid the present record-high SSRO studying, the RR continues to be at multiyear lows on the backside of the inexperienced band. Traditionally, shopping for Bitcoin when the RR is at such low ranges (i.e., massive hodl financial institution relative to present BTC worth) has produced outsized returns.
It additionally implies that regardless of the Bitcoin worth sitting at 17-month highs, confidence stays very excessive in Bitcoin’s future worth efficiency.
Thus, long-term holders could also be well-positioned for main good points, contemplating these entities management an all-time excessive of the full provide.
Issue within the potential multibillion-dollar inflows right into a Bitcoin ETF, and it’s simple to see why six-figure BTC price predictions are becoming common for the post-halving period.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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