Stablecoin Surge Boosts Bitcoin Value as Institutional Investment Rises
Summary:
The rise in stablecoin supplies is leading to an increase in Bitcoin (BTC) value, according to data from blockchain analytics firm Glassnode. The stablecoin supply ratio (SSR) has been consistently decreasing, indicating that stablecoins have more buying power against Bitcoin. Moreover, spot Bitcoin exchange-traded funds (ETFs) have garnered institutional investment in the U.S., triggering changes in Bitcoin's supply dynamics. Institutional flows are also contributing to an increase in on-chain volumes.
The ongoing increase in the supplies of stablecoins appears to be driving an upsurge in Bitcoin (BTC) value. According to data shared by blockchain analytics company Glassnode, the stablecoin supply ratio (SSR) oscillator has been on a steady decline. The SSR oscillator is a tool that calculates the correlation between Bitcoin's market cap and the cumulative value of all recognised stablecoins, making it an indicator of the buying capacity of these stablecoins against the total amount of BTC.
When SSR values diminish, this signifies that stablecoins have an augmented capacity to purchase BTC. There has been a sharp dip in the SSR from a high of 4.13 in October down to a mere 0.74 by January 22.
In an investigation of the global stablecoin market cap, CryptoSlate's research and data analyst, James Van Straten pointed towards a significant increase starting in the fourth quarter of 2023 that is still ongoing. He stated that the rotation of stablecoins into Bitcoin took BTC over the 42k mark last week. Currently, stablecoin supply is up by 10B from its lowest point and has climbed by 3.5% in the past 30 days.
On the other hand, for the duration from May 2022 to October 2023, stablecoin supply was decreasing. Meanwhile, Bitcoin is experiencing its adjustments in supply dynamics, primarily due to the introduction of spot Bitcoin exchange-traded funds (ETFs), which are attracting institutional capital investors in the United States.
There has also been a substantial rebalancing from the Grayscale Bitcoin Trust (GBTC) that was recently converted into one such ETF. In their weekly newsletter, Glassnode referred that the on-chain flows are currently in flux, following the launch of these ETFs. Roughly 115.6k BTC have been redeemed from the GBTC ETF since the conversion, causing a significant market disruption. However, analysts anticipate that the volume of these redemptions to plummet soon, resulting in lower sell-side pressure. Concurrently, institutional capital flows are driving up on-chain volumes.
Published At
1/31/2024 12:27:56 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.