BTC, bullish signal, cryptocurrency exchanges, Market Capitalization, on-chain analyst, Spent Output Profit Ratio (SOPR), stablecoin supply ratio, USDC, Willy Woo

According to a report by Glassnode, bitcoin’s declining stablecoin supply ratio (SSR) indicates an increased supply of newly minted coins on exchanges. In turn, this increase in supply means exchanges are currently “highly liquid and ready to buy up assets such as bitcoin.â€

Stablecoin Supply Growth

As explained in the report, the SSR is a ratio of the total value of all bitcoins versus stablecoins. This metric “decreases when (either) the price of BTC is low or when more stablecoins are entering circulation.â€

BTC, bullish signal, cryptocurrency exchanges, Market Capitalization, on-chain analyst, Spent Output Profit Ratio (SOPR), stablecoin supply ratio, USDC, Willy Woo

However, with BTC prices are already high, this leaves the increased stablecoin supply as the only possible reason behind the low ratio. Already, Messari data shows that the total stablecoin market capitalization currently stands at approximately $39 billion as of February 1. From this total, the USDT stablecoin accounts for $28 billion or approximately 71% share of the market.

However, as the Glassnode report notes, it is the USDC stablecoin that is seeing “massive exchange inflows in 2021.†In their commentary on the likely impact of such inflows, the report’s authors say:

The authors also explain that “this high figure should increase investors’ confidence in any dips being quickly bought up, making it a bullish signal.â€

Profit Taking Complete

Meanwhile, also weighing in with their own bullish commentary is the onchain analyst, Willy Woo. According to Woo’s analysis, profit-taking is now complete, and “the market has completed a full purge of overheatedness.â€

Woo, who uses the spent output profit ratio (SOPR) chart to support his assertion, suggests the crypto market may have gone past the “bearish phase.†He explains that when “SOPR touches the 1.0 line, coins moving between investors no longer carry profit.â€

BTC, bullish signal, cryptocurrency exchanges, Market Capitalization, on-chain analyst, Spent Output Profit Ratio (SOPR), stablecoin supply ratio, USDC, Willy Woo

To bolster this point, Woo explains:

At the time of writing, BTC was trading above $35,700 handle up 5% on Tuesday.

Do you agree that the lower SSR ratio points to high liquidity on exchanges? You can share your views in the comments section below.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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