Bitcoin (BTC) has reached its highest level in 17 months, and there are only 164 days left until the next Bitcoin halving event. Additionally, there is growing anticipation for the approval of a Bitcoin exchange-traded fund (ETF) in the coming months.
Despite Bitcoin’s impressive 106.38% year-to-date gains, the stablecoin supply rate oscillator (SSRO) has raised concerns. This metric, which measures the dominance of stablecoins versus Bitcoin, has surged to a new all-time high of 4.13 on October 25th, according to data from Glassnode. While this surge suggests a strong appetite for Bitcoin accumulation on-chain, it also indicates that the purchasing power of stablecoins is at a relative all-time low.
This is the highest divergence in the SSRO since 2019, when it reached 4.12 just 320 days before the May 2020 halving event. The emergence of a top signal on the SSRO this week could potentially indicate a retracement period before the next halving event in April 2024.
However, it is worth noting that high SSRO levels have historically aligned with the beginning of bigger bull market cycles. While the relative buying power of stablecoins may currently be weak, this could be seen as a positive sign for Bitcoin’s long-term prospects.
Another market indicator, the reserve risk (RR) indicator, offers a unique perspective on market sentiment. This indicator measures the risk-reward incentives in relation to the current “HODL bank” and spot BTC price. Currently, the RR is at multiyear lows despite the record-high SSRO reading. Buying Bitcoin when the RR is at such low levels has historically resulted in significant returns.
Furthermore, long-term holders of Bitcoin, who currently control an all-time high of the total supply, may be well-positioned for major gains. When combined with the potential inflows into a Bitcoin ETF, it becomes clear why many experts are predicting six-figure BTC prices in the post-halving period.
It is important to note that this article does not provide investment advice or recommendations. Investing in cryptocurrencies carries risks, and readers should conduct their own research before making any investment decisions.