SSR Indicator Approaching All-Time Low: Bitcoin (BTC) On-Chain Analysis

SSR Indicator Approaching All-Time Low: Bitcoin (BTC) On-Chain Analysis

SSR

The SSR is an on-chain indicator that is used to measure the relationship between the supply of stablecoins and that of BTC. It can move through two changes, which are not related to the other:

  • Bitcoin price change
  • Stablecoin supply change

The lower the value of the indicator, the higher the percentage of the BTC supply that stablecoins can buy. More specifically, a value of 10 means that 10% of the entire BTC supply can be purchased with stablecoins.

Therefore, if the price of BTC moves down, the SSR decreases. On the contrary, even if the price of BTC stays the same, an increase in the supply of stablecoins would cause SSR to move lower.

SSR hit an all-time low of 6 on June 8. This meant that 16.66% (1/6) of the BTC supply could be purchased by supplying stablecoins.

More importantly, it was the fourth time that SSR fell below the lower Bollinger band (black circle). The other three times this occurred were followed by a significant upward movement in price shortly thereafter.

After a bounce, the SSR is approaching June’s all-time lows once again, currently at 6.52.

SSR indicator

Since the beginning of September, the Bollinger bands have been closing in on each other. This occurs when the value of the indicator remains constant for a considerable period of time.

A decline below the lower Bollinger band (light blue) could be a strong sign that the bottom has been reached.

This would be in line with the readings for other long-term indicators , which suggest a bottom is approaching.

USDT supply

The circulating supply of USDT (black) has been increasing steadily since September 2020. For the past two months, this gradual increase has been the catalyst for the slight drop in SSR, as the price of BTC has remained constant.

The supply of USDT held on exchanges has also gradually increased, mirroring that of circulating supply.

However, the supply of USDT in smart contracts has been declining since the beginning of October 2020.

Therefore, the increase in the circulating supply of USDT will go mainly to trading balances instead of smart contracts.

USDT - Circulating Supply

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