Bitcoin (BTC) is at 17-month highs with simply 164 days till the following 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 price oscillator (SSRO) has raised a serious 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 necessary measure of the dominance of stablecoins vs. Bitcoin, has surged to a brand new all-time high at 4.13 on Oct. 25, in accordance with knowledge from Glassnode. Such a surge hints at a major urge for food for Bitcoin accumulation on-chain.

The SSRO hit a brand new all-time high at 4.13 on Oct. 25. Supply: Glassnode

Nonetheless, this additionally means that the buying energy of stablecoins is at a relative all-time low.

Traditionally, that is the best SSRO divergence since 2019, when it rocketed as much as 4.12 on June 26 — precisely 320 days earlier than the Could 2020 halving.

The emergence of this identical prime sign on the SSRO this week might, due to this fact, precede a retracement interval earlier than the following halving occasion in April 2024.

Nonetheless, whereas the relative shopping for energy is at present weak — and an area prime just like the one in 2019 is definitely attainable — the bigger implication is that high SSRO ranges have additionally aligned with the begin of larger bull market cycles. 

“Reserve threat” suggests this BTC rally could also be completely different

As a possible spot Bitcoin ETF approval tantalizes markets with implications for BTC’s value, one metric is portray a novel picture of market sentiment, suggesting this Bitcoin rally may very well be completely different from 2019.

Particularly, the reserve threat (RR) indicator, which measures the risk-reward incentives in relation to the present “HODL financial institution” and spot BTC value. As Glassnode places it:

When confidence is high and value is low, there may be a pretty threat/reward to speculate (Reserve Risk is low). When confidence is low and value is high then threat/reward is unattractive at that time (Reserve Risk is high).”The RR indicator measures the risk-reward incentives in relation to the present “HODL financial institution” and spot BTC value. Supply: Glassnode

When the SSRO accelerated to equally high ranges in June 2019, the RR adopted go well with, climbing above the inexperienced band, as proven within the chart above.

But, amid the present record-high SSRO studying, the RR remains 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 value) has produced outsized returns.

It additionally implies that regardless of the Bitcoin value sitting at 17-month highs, confidence stays very high in Bitcoin’s future value efficiency.

Thus, long-term holders could also be well-positioned for main good points, contemplating these entities management an all-time high of the entire provide.

Issue within the potential multibillion-dollar inflows right into a Bitcoin ETF, and it’s simple to see why six-figure BTC value predictions have gotten frequent for the post-halving interval. 

This text doesn’t include funding recommendation or suggestions. Each funding and trading transfer includes threat, and readers ought to conduct their very own analysis when making a choice.