The purchasing power of stable coins in circulation would be at an all-time high. Glassnode is noting that purchasing power and higher demand for bitcoins are running in parallel.
The fall in the price of bitcoin has made the purchasing power of stable coins towards the first cryptocurrency in the market reach its highest levels since 2018. This calculation began with a metric published this Friday, June 25 by Glassnode sources.
According to the blockchain analytics firm, the Stablecoin Supply Ratio (SSR) oscillator reached its lowest point since October last year. The firm states in a tweet that this calculation indicates that capital has been flowing back from stablecoins to bitcoin.
This metric shows an increase in the purchasing power of the total supply of stable coins in circulation. When the ratio is high, it means that circulating stablecoins can purchase less BTC.
According to analysts, the current point of this indicator means that the capital that feeds the currencies is flowing towards the bitcoins in the market. This point means more flow of BTC purchases with stablecoins, which indicates that new price increases are coming.
The relationship of stablecoins, or currencies anchored to the dollar value, with the bitcoin market, is very close. These currencies serve on exchanges as substitutes for fiat money for traders, who use them to acquire and sell BTC and other cryptocurrencies in those markets. In theory, the more purchasing power and stable coins circulating, the more solid the demand and purchase for BTC.
A variable Between the BTC’s Price and the Issuance of Stablecoins
Glassnode measures with the oscillator and the SSR the accumulated purchasing power of all stablecoins. In short, the metric studies the relationship between the total capitalization of stablecoins and that of BTC.
Although the higher the price of BTC, the purchasing power of the total stable coins in circulation would decrease, sometimes it can go in a different direction. If the issuance rate of these coins increases its speed, their running total could gain purchasing power even in bullish bitcoin scenarios.
That is why in the Glassnode measures, users can find very different levels of purchasing power of stablecoins at similar BTC price points over time. Bullish scenario for bitcoin.
Glassnode itself highlighted in the weekly report that bitcoin was showing worrying indications of weakness. Precisely, on Tuesday, the cryptocurrency crumbled down for the first time since January below $ 30,000. And although the currency managed to recover quickly, it still struggles between $ 32,000 and $ 35.00 per coin.
Analysts such as Willy Woo and PlanB insist that the bull market cycle has not ended yet. According to both analysts, BTC should set new all-time highs in a range between $ 135,000 and $ 288,000.
By: Jenson Nuñez
