2023-08-07 13:33:13
The Stablecoin Supply Ratio (SSR), which indicates the declining purchasing power of coins tied to the dollar, increased significantly this year. Let’s see what this means for the cryptocurrency market. The Stablecoin Supply Ratio (SSR) is an important market indicator that has been rising slightly but steadily since the beginning of the year, indicating a decline in the purchasing power of stablecoins. The indicator helps traders and investors understand whether the market is currently dominated by dollar-pegged stablecoins or Bitcoin holders. SSR is a metric that provides insight into the supply and demand dynamics between Bitcoin (BTC) and the US Dollar. SSR is calculated by dividing the total supply of stablecoins by the market capitalization of Bitcoin. An increasing trend in the Stablecoin Supply Ratio (SSR) indicates a slowdown in the purchasing power of stablecoins, which is often associated with bearish or sideways market sentiment. Conversely, a downtrend in SSR indicates a rising state of stablecoin purchasing power, which is typically associated with bullish market sentiment. Since the beginning of the year, the SSR has increased from 2.36 to 4.65. This sudden increase indicates a significant decrease in the purchasing power of stablecoins. This trend occurred in parallel with the rise in the price of Bitcoin. Performance of the SSR indicator (orange) from 2018 to 2023 (source: Glassnode) Tether stocks hit record highs The recent increase in the indicator represents a significant increase in the supply of some stablecoins. As shown in previous analysis, the supply of Tether (USDT) and TrueUSD (TUSD) reached an all-time high this year. Tether minted more than $16 billion worth of new USDT in 2023. Its current market capitalization exceeds $83 billion. USDT’s market dominance reached new highs in 2023 due to other coin issuers struggling due to the US banking crisis and regulatory tightening. At the end of July, Tether’s supply reached an all-time high of $83.89 billion, while TrueUSD’s supply peaked at $3.04 billion. These two stablecoins are of particular importance as they make up the majority of crypto-stablecoin trading pairs on central exchanges. Graph showing USDT and TUSD stocks in circulation (source: Glassnode) Summary A rising SSR therefore has multiple implications and requires careful analysis. In addition to the increasing supply of stablecoins, the rise in SSR also indicates that the purchasing power of stablecoins is decreasing compared to Bitcoin. This might potentially lead to a decrease in demand for Bitcoin, which in turn might put downward pressure on its price.
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