Many of the newly issued stablecoins are deposited on exchanges, which means that they have high liquidity and can buy assets such as BTC at any time.
Original title: “Glassnode 丨 Grayscale purchases are strong, and BTC continues to be bullish? 》
Written by: LIESL EICHHOLZ
Translation: Li Hanbo
BTC’s performance this week was relatively stable, starting at $32,300 and ending at $33,060. However, on Friday, it quickly soared above $38,000, then fell back again before the end of the day, and slowly declined for the rest of the week.
Bullish view
As more stablecoins are issued, BTC’s stablecoin supply ratio (SSR) has been declining in 2021. When the SSR is low, it means that the supply of stablecoins is large compared to BTC, which indicates that there is more purchasing power ready to flow into BTC and other assets.
SSR is the ratio of the total value of all bitcoins to stablecoins – therefore, when the price of BTC is lower or more stablecoins enter the circulation, the SSR will decrease. Even when the price of BTC remains high, the SSR is still so low, which precisely shows how many new stablecoins have entered the ecosystem recently.
In addition, many of these newly issued stablecoins are deposited in exchanges, which means that they have high liquidity and can buy assets such as BTC at any time.
Bearish view
After the surge in early January 2021, the number of active entities on the Bitcoin network has dropped significantly, returning to the previous trajectory. Although this indicator has started to increase since then, it has not yet returned to the level of the market top in January.
This news is not so much bearish as it is slightly bearish. It shows that the surge to more than $40,000 was driven by an increase in activity, which has since decreased as prices have fallen. However, this reduction looks more like a healthy correction than a shift to a bearish trend , so investors should not worry about this indicator.
Willy Woo’s bullish comment
Woo’s point of view: The market has completed a complete cleanup of overheating.
Once selling begins, selling pressure will give rise to more sellers to take the opportunity to profit. The profit closing has now been completed. We can see this from the SOPR diagram below. When SOPR hits the 1.0 line, there is no longer any profit in trading between investors.
To push SOPR down, investors must be willing to sell at a loss. To allow this, we need to enter a bearish phase, but this is very unlikely because we are limited by the bottom line of $29,000.
Other currency topics: USDC will usher in large-scale exchange inflows in 2021
After slow growth since 2018, as of 2021, the number of USDC on exchanges has begun to increase rapidly. This trend has brought more purchasing power to the crypto market, waiting as a potential catalyst, ready to flow into BTC and other crypto assets.
In January alone, the number of USDC on exchanges increased by more than 112%, from US$431 million to more than US$915 million. This means that USDC alone has a purchasing power of nearly 1 billion U.S. dollars and is ready to be transferred to BTC and other assets.
This high number should increase the confidence of investors, and any limit down will be quickly bought and become a bullish signal.
Weekly topic: Grayscale is acquiring BTC faster than mining
Since 2021, about 26,000 BTC have been mined. At the same time, the digital asset investment fund Grayscale acquired more than 40,000 BTC during the same period.
This means that from the grayscale acquisition alone, the available BTC supply has dried up faster than it was created. This has not taken into account the major investments made by other institutions in BTC this year, which are all very large in scale.
These large-scale investments have been drying up the liquidity supply of BTC, as can be seen from the red area below. 2021 is the year in which Bitcoin’s liquidity supply continues to decrease the most in the history of BTC.
As the supply of BTC continues to be bought by large investors and institutions, the new price bottom line is set at higher and higher levels. This continued supply restriction puts Bitcoin in a bullish zone.
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