Bitcoin (btc) is at 17-month highs with just 164 days until the next Bitcoin halving event, along with the anticipation of a spot Bitcoin Exchange Traded Funds (ETF) Approval in the coming months.
However, amid Bitcoin's 106.38% year-to-date gains, the stablecoin supply rate oscillator (SSRO) has raised a major flag despite suggesting the start of a new cycle. bullish.
Stablecoin Purchasing Power Weakens Ahead of Bitcoin ETF
This stablecoin supply index metricwhich acts as an important measure of mastery of stablecoins vs. Bitcoin has reached a new all-time high of 4.13 on October 25, according to data from Glassnode. Such a surge hints at a significant appetite for on-chain Bitcoin accumulation.
However, this also suggests that the purchasing power of stablecoins is at a relative historical low.
Historically, this is the highest SSRO divergence since 2019, when it spiked to 4.12 on June 26, exactly 320 days before the May 2020 Halving.
Therefore, the appearance of this same high signal on the SSRO this week could precede a pullback period before the next halving event in April 2024.
However, while relative purchasing power is currently weak (and a local high like 2019 is certainly possible), the most important implication is that high levels of SSRO have also aligned with the Start of larger bull market cycles..
'Reserve Risk' Suggests This BTC Rally May Be Different
as potential Bitcoin ETF spot approval tempts markets With implications for BTC price, one metric is painting a unique picture of market sentiment, suggesting this Bitcoin rally could be different from 2019.
That is, the reserve risk (RR) indicator, which measures risk-reward incentives relative to the current โHODL bankโ and BTC spot price. As Glassnode says:
When confidence is high and the price is low, there is an attractive risk/reward to invest (reserve risk is low). When confidence is low and price is high, then the risk/reward is not attractive at that time (reserve risk is high).โ
When the SSRO accelerated to similarly high levels in June 2019, the RR followed suit, rising above the green band, as shown in the chart above.
However, amid the current record SSRO reading, the RR is still at multi-year lows at the bottom of the green band. Historically, buying Bitcoin when the RR is at such low levels (i.e. a large bank hodl relative to the current BTC price) has produced huge returns.
It also implies that even though the Bitcoin price is at 17-month highs, confidence remains very high in the future behavior of the Bitcoin price.
Therefore, long-term holders may be well positioned for significant gains, considering these entities. control an all-time high of the total supply.
Considering the potential multi-billion dollar inflows into a Bitcoin ETF, it's easy to see why six-figure BTC price predictions are becoming common for post-half period.
This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should conduct their own research when making a decision.
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