Bitcoin: Stablecoin Supply Ratio

Hey everyone and thanks for jumping back Into the cryptiverse today we're going To talk about Bitcoin but more Specifically we're going to talk about How the stable coins Supply ratio can Provide insights into the price of Bitcoin if you guys like the content Make sure you subscribe to the channel Give the video a thumbs up and also Check out into the cryptoverse premium At into the cryptiverse.com we of course Do have several different tiers Including a free one make sure you check That out link is in the description Below Let's go ahead and jump in so the stable Coin Supply ratio is is something that I Don't believe I've talked about here on The public Channel but as you guys know The stablecoin market is quite Interesting and it's so it's so Interesting of course that we look at The dominance of Bitcoin including Stable coins and excluding stable coins Because it sort of tells us uh something Different depending on exactly how we Look at it so what I want to do in this Video is of course we're first going to Go over the definition of the stable Coin Supply ratio and then we're going To look at a couple Um you know sort of derivatives from From that metric that we can that we can Really start to explore but if you're

Not familiar with it stable coins pi Ratio is equal to bitcoin's market cap Divided by the stable coin market cap And the reason we we might be interested In something like this is because it can Essentially give us an extent of the Stable coin buying power and estimate Its potential to move the price to Bitcoin in various directions okay so Right now you can see the that the blue Line here is the stable coin market cap And it's actually been slowly uh Trending down a little bit recently After after a pretty pretty nice and Sustained move up for quite a long Period of time if we hide that and then We just look at the say stable coin Supply ratio Which again is just bitcoin's market cap Divided by the stable coin market cap Okay you can see that it's generally Been trending down right it's been Trending down so bitcoin's market cap When you divide it by the stablecoin Market cap this over time Has been trending down I might say well Why has it been trending down right well If you think about it if the stable coin Market is going up but bitcoin's market Cap is not going up really enough to Offset it then you would expect it to go Down because you're dividing bitcoin's Market cap by a larger number right You're dividing it by generally a large

Number in the short term it's been Increased I'm going to get over the Macro scale it's been decreasing so Again you could argue that the Stablecoin market has has been Increasing quite rapidly and so over the Long Haul we're seeing this metric go Down One of the things we can do though is is We can look at the the Bollinger band so This is the stable coin Supply ratio uh But we're looking at the Bollinger Bands Of the specific metric and if you're not Familiar with the Bollinger Bands it's Just a set of traditional Um or you know traditional trend lines That a lot of people use that are Plotted to standard deviations away from The 200-day simple moving average okay So in this case we're showing you the Bollinger Bands of the stable coins Supply ratio so it's of course looking At the 200-day estimate of that and one Of the things you'll notice is that this Orange line so the source Orange Line it Pierces through Occasionally to the downside and Occasionally to the upside right we see This happen time and time again we saw It happen in December 2018. we saw it Happen in June of 2019 we briefly saw it Over here in October 2019 but it's very Short-lived we also saw it back over Here in March of 2020

Let me know what happened after that uh We saw it occur back in early 2021 we we Went under it in June of 2021 and and You can kind of see where it goes below It and where it goes above it but what Do you notice right what do you notice When it goes below it It usually means We're going to see some upside soon Right So we can see when it goes below it Generally means all right well yes price Action it's pretty terrible right now But you'll tend to see it go back in the Other direction Right But in the same way When it gets sort of you know too high Over here right so when it goes above These bulge bands which again are a set Of trend lines two standard deviations From the 200-day SMA right so it's Showing you when when we're hitting These extremes When it goes above it above the upper One It doesn't I mean it doesn't mean that You're immediately going to see price Action go down just like going below it Doesn't mean you're immediately going to See price action go up I mean you can See we want the load over here in November and we didn't really bottom Until December in the same way we went

Above it over here in May but the market Did not really turn around until June so There's about a month lagger so a month Or two lag So again you know just because you see It Go below it it doesn't mean you Should say all right it's time to put on Your rally account just because it goes Above it doesn't mean it's necessarily Immediately time to sort of call for a Dump but what it shows you is that there Are some subtle shifts in the trend and Hey it's likely going to be coming to an End soon is what it historically tells Us you know and you can go forward right In March of 2020 it it showed you here You know clear as day we were below it Again and it and it generally was Indicative of of more upside coming over Here in January 2021 you can see we went Above it and right when we went above it We actually had a pretty nice correction Back down and yes we did have this Distribution phase but arguably you know We still ultimately were sort of hugging The top part of this for a while and it Was indicative of an eventual move Coming back to the downside and then When it came back to the downside over Here you know it was sort of like hey Yeah price action is terrible once again But usually we'll see it go back in the Other direction eventually right And we see this play out time and time

Again you know when it goes below it A trend shift for a while right even Over here in June a trend shift for a While where price action generally goes Higher but right now we find ourselves Above it now again what does that mean Well it doesn't necessarily mean that The trend shift has to occur immediately But what it does show is that you know It is getting somewhat you know somewhat Hot and we're likely going to see this Sort of at least you know likely reverse Some reversion to the mean at some point In the not so distant future again there Can be a you know a month or two delay Something like that but historically it Does show that eventually it we we're Not too far away from seeing some type Of reversion back to the mean so I Thought this was an interesting Indicator and I know there's some people That are looking at The you know the comparison between you Know the 2019 move and and the 2023 move I do think it's probably worthwhile for People to also compare to 2015 I think We can get tunnel vision if you just Look at 2019 because you just see this Parabolic rally that went up 4X if you Look at 2015 you see something Completely different and and they both Again came a year after years where it Was down only right 2014 2018 of course Now 2022. and so

You could argue that we're already in That sort of you know higher extension Level when you're talking about the Stable coin Supply ratio and getting Above the Bollinger Bands right and you Can see it happen in 2019 and and we Spent from about May 11th to June 19th So about five weeks above it here we got Above it on January 20th and we just Crossed back below it February 24th so I Get about five weeks although we did Spend Um a few days you know a few days below It right from maybe almost a week or so So when you look at it like this I mean It does sort of sort of show a slightly Different story and it I think it's Somewhat compelling not to say you know Not to say that uh you know that the Bitcoin needs to reverse course and and Go down a lot immediately but what it Does indicate is that This trend is is ultimately fighting a Losing battle here in the short term is What it is historically meant right Again I mean I I would be remiss if I Didn't at least try to explain the the Data as it you know as as I have it in Front of me I mean you could always Point to Prior times when it happened And yes sometimes the price went a Little bit higher but eventually we Entered back into that downtrend when it Got into these levels right

And that's really I think the point that That you should that I'm trying to sort Of communicate here is is that you know You will typically see a sort of reverse Course and go back the other way another Way to look at this is to look at it as An oscillator right so the the you know Measuring it a little bit differently And one of the ways when you look at it Like this it's also somewhat compelling What do you notice when it's all the way Down here It's a good thing right There's a lot of buying power And we see this go up quite a bit Right so when it's all the way down here Doesn't mean the price is going to Immediately go up but when you start Seeing this trend higher it it typically Means good things are coming even if It's not obvious immediately right so I Mean yes we went down in the price a Little bit during you know for a few More weeks But we still ultimately broke out to the Upside but then over here once we got You know once we get pretty far spent to The upside Like we did back in in June as well or May and June This shows you that again it's fighting A battle that is difficult to sustain For too many more weeks so for instance When it peaked over here it peaked in

You know in in late May and Bitcoin Continued its rally until late June so It lasted about another month but again It does show that it was fighting a Difficult battle to sustain for too much Longer You can see over here we we sort of hit At least a local top back in January Late January and then we came back up to A very similar level in mid-February Okay Something to keep in mind now I don't Know if it's going to go any higher But this at least does indicate to me That yes could the trend last a little Bit longer maybe but history shows us That this will likely eventually Resolve back to the downside where You're going to see some type of Reversion to the mean and it's not that Bitcoin can never go up against the US Dollar right it just shows you the Stable coin now the stable coin Supply Ratio the purpose of it again is to show You the buying power okay so the an Estimate in its potential to move the Price of Bitcoin so if it's already up Here It's not going to be as able to move it As if it were down here at lower levels Okay so the higher it is right the Higher this is the harder it is For the stable coin Supply right to move The price of Bitcoin the lower it is

The the the easier time the Sip coin Supply has at moving the price of Bitcoin so this is ultimately what I Wanted to convey uh by this metric I'm Not again I I want to be clear it's not Meant to show you the immediate price Action of Bitcoin But it's it's meant to sort of show you That when you get to low levels like you Were back in June hey it means you know What you're likely going to start to see This the price go back in a positive Direction for a while When it gets to high levels You get to that point where you think All right it's starting to fight a Difficult battle here and as much as we Would like for the price or as much as Many people would like the price of Bitcoin to just you know go up only for A while Um this does generally dictate that yeah It could have a few more weeks a couple More months left in it but it's likely Not going to sustain it for too much Longer before you see some type of Reversion to the mean if you guys like The content make sure you subscribe to The channel give the video a thumbs up And also check out into the Cryptographers premium at into the Cryptiverse.com see you guys next time Bye

Coinbase
OUR TAKE

Coinbase is a popular cryptocurrency exchange. It makes it easy to buy, sell, and exchange cryptocurrencies like Bitcoin. Coinbase also has a brokerage service that makes it easy to buy Bitcoin as easily as buying stocks through an online broker. However, Coinbase can be expensive due to the fees it charges and its poor customer service.

Leave a Comment

    • bitcoinBitcoin (BTC) $ 42,345.00 3.28%
    • ethereumEthereum (ETH) $ 2,247.73 4.08%
    • tetherTether (USDT) $ 1.00 0.15%
    • bnbBNB (BNB) $ 234.15 2.36%
    • xrpXRP (XRP) $ 0.624101 5.63%
    • solanaSolana (SOL) $ 69.36 3.67%
    • usd-coinUSDC (USDC) $ 1.00 0.05%
    • staked-etherLido Staked Ether (STETH) $ 2,246.63 4%
    • cardanoCardano (ADA) $ 0.561405 4.1%
    • dogecoinDogecoin (DOGE) $ 0.098358 0.77%