The total supply of stablecoins has hit record, buying power has also increased, indicating that Bitcoin price will soon recover
According to an analysis by Glassnode, with supply surging, Bitcoin’s Stablecoin Supply Ratio (SSR) is at a year’s low of 13.4. Before that, the SSR also hit an all-time low at 9.6. This number shows a bullish Bitcoin price signal, demonstrating that the global supply of stablecoins is becoming larger than Bitcoin market capitalization.
Glassnode also published the May 3 Week on Chain report:
#Bitcoin has bounced from correction lows as coins mature, HODLing strengthens and stablecoin supplies hit ATH.#Ethereum also shows market strength as throughput increases, exchanges are drained and DeFi absorbs $ETH.
Read more in The Week On-chain?https://t.co/0aSkAg1j04
— glassnode (@glassnode) May 3, 2021
Bitcoin price rally as stablecoin supply tags record highs
Tether is firmly positioned as the industry leader in stablecoins, representing two-thirds of the combined capitalization of the top four stablecoins. USDT’s total supply hit an all-time high of $ 51.78 billion at the end of last week after raising $ 1.48 billion or 3% in just seven days.
The circulating supply of the four largest stablecoins has skyrocketed to new all-time highs, suggesting that buyers could make another step forward for the Bitcoin and crypto markets soon. The combined capitalization of Tether (USDT), USD Coin (USDC), Binance USD (BUSD), and Dai (DAI) has increased by nearly 190 percent from $ 27 billion to nearly $ 78 billion since the beginning of this year. USDC supply has also increased by around $ 1 billion in the past week, with its capitalization currently at $ 14.5 billion. It quickly hit a peak of $ 15 billion on April 30.
BUSD’s circulating supply hit a record $ 7.8 billion on May 3, while DAI’s supply is at an all-time high of $ 3.9 billion so far.
With supply surging, Glassnode emphasized that Bitcoin’s Stablecoin Supply Ratio (SSR), which measures Bitcoin supply divided by the supply of stablecoins, is at a year low of 13.4 and is hitting an all-time low era at 9.6.
Stablecoin Supply Ratio Live Chart | Source: Glassnode
The chart shows the SSR consistently at low levels throughout 2020 and 2021 as the supply of stablecoins has largely increased in proportion to Bitcoin’s rise in price.
According to Glassnode, the falling SSR value is a bullish signal that the global supply of stablecoins is becoming larger than the Bitcoin market cap:
“As the total supply of stablecoins increase, it suggests an increased ‘buying power’ of crypto-native capital that can be quickly exchanged and traded into BTC and other crypto-assets.”
Aave’s liquidity mining incentives launched on April 27 will also boost demand for stablecoins as the bulk of the rewards are targeted at placing USDT, USDC, and DAI. DeFi investors have observed that the increase in Aave yields has an immediate impact on stablecoin loan volumes that have doubled since the end of April.
You can see the BTC price here.
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