On-chain indicators of the supply of stablecoins (SSR) and Tether (USDT) on exchanges allow you to compare the purchasing power of stablecoins and bitcoin (BTC).
The stablecoin Supply Ratio (SSR) has sunk to an all-time low, while USDT supply volumes are close to an all-time high. Updated the historical maximum and a similar indicator for Binance USD (BUSD), which, along with Tether, is also among the top largest stablecoins.
What is SSR
The SSR on-chain indicator represents the ratio of the supply of stablecoins and bitcoin (BTC). It is defined as the result of dividing the current issue of bitcoin by the issue of stablecoins.
This ratio can have a direct impact on the BTC rate. This is because traders often use traditional fiat-backed stablecoins to buy (or sell) bitcoins.
According to industry analysts, low values of the SSR indicator traditionally indicate a high purchasing power of stablecoins relative to BTC. Accordingly, if the supply ratio of stablecoins decreases, this can potentially indicate the probability of an increase in the bitcoin exchange rate.
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SSR fell to a record low
The SSR coefficient is calculated from March 2018. At first, the indicator stayed in the range of 50-80, until it fell in December 2018. After that, it moved in tandem with the dynamics of the BTC exchange rate until the correction in March 2020.
After that, they parted ways. While bitcoin was growing, the SSR index was declining, relentlessly moving the lows. As a result, on May 23, the SSR coefficient updated the historical minimum by 7.33. This happened against the background of the drawdown of the BTC exchange rate and the stable supply of stablecoins.
Read also: The capitalization of stablecoins is only 10% of the capitalization of bitcoin
Balance sheet USDT close to all-time high
Meanwhile, the volume of USDT stocks on the exchanges increased throughout the year. On February 7, this figure reached a historic high of $4.1 billion, after which it fell sharply. However, it still remains well above January levels.
Noteworthy is the dynamics of the indicator at the end of this month, when on May 21 it soared to $3.3 billion, and then declined. It may indicate that the inflow of USDT to the exchanges preceded the drawdown, and then these coins were used to buy on the fall.
The increase in exchange balances in Binance USD (BUSD) has been occurring consistently since September 2020. Unlike the USDT, this indicator did not decline at all this year. On May 26, it marked a historic high of $4.3 billion.
Recall that the BUSD stablecoin is used in the calculation of the SSR coefficient. Accordingly, the increase in its supply helps explain the decline in SSR.
Read the last one bitcoin forecast and other major altcoins can be here.
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