The Bitcoin community is divided by opinion and at the moment, it is fair. The market hasn’t been outrightly bullish after recent corrections, but the asset continues to hold fort above the $42,000-mark. The major issue with such a price position is that it leads to both bullish and bearish arguments.
The discussions are further earmarked with confusion and the general public remains on the fence. However, it is hard to deny that strong bullish signals have risen for Bitcoin over the past week. And, these are hard to ignore, especially in light of their rarity.
Stablecoin Supply Ratio back in play?
For a major part of 2019, when Tether’s dominance was beginning to rise, the stablecoin supply ratio or SSR was highlighted to be an important metric in terms of stable assets evidently pumping the market.
Now, while many speculated that these rallies were signs of manipulation, over time, there has been sound logic behind SSR’s impact.
Now, according to data from CryptoQuant, the SSR has gone down somewhat. This means that the purchasing power of Bitcoin has increased. As can be seen from the chart, whenever SSR has been down, there has been a bullish rally afterward, one which invariably levels up with the ratio.
Now, at press time, the SS ratio was lower than the range seen in October 2020. Back then, the same was followed by a strong bullish market, one that pushed Bitcoin above $20,000.
The only minor caveat attached to the SS ratio is that with rising USDT pairs, the SSR could be aligned with other altcoins as well. What’s more, a low SSR value may trigger an altseason simultaneously, taking a bit of momentum off Bitcoin’s movement.
Bitcoin exchange reserves are down
Another major indicator that can be assessed alongside the SSR is the declining Bitcoin exchange reserves.
Since the black swan event of March 2020, a trend that was observed prominently across the industry was the outflows of Bitcoin from exchanges. Investors were taking BTCs off platforms, eliminating massive selling pressure and strengthening the HODLing narrative.
At press time, a similar range had been reached again. At the moment, reserve Bitcoins on all exchanges are down to the level seen in March-April 2021. Here, it’s worth noting that Bitcoin hit its ATH of $64,000 on the back of the same.
This can be seen as a major bullish signal because the propensity of price moving on the basis of smaller trading volumes increases when a huge amount of BTC is off the exchange. It creates a supply shock, which then leads to a significant rally.
Are we off the hook just yet?
Perma-bulls would like to think so, but bearish turnarounds can never be dismissed until the price has reached another position of no-return. To be fair, Bitcoin is more bullish than bearish at the moment. Ergo, the next few weeks will be extremely critical for the world’s largest digital asset.