At $11,400, Bitcoin (BTC) is ripe for a fresh price surge thanks to stablecoin investors buying up cheap coins, data suggests.
Highlighting the latest readings from its stablecoin supply ratio (SSR) metric on Aug. 26, on-chain monitoring resource Glassnode forecast upside for BTC/USD.
SSR refers to the potential buying power of stablecoins over Bitcoin. A low Bitcoin price allows stablecoin owners, for example, on exchanges, to purchase more of the BTC supply. This demand pushes the price of Bitcoin up, given its predictable, verifiable supply and high stock-to-flow ratio.
As the price increases, stablecoins, which remain priced the same in whichever fiat currency they are pegged to, can buy less of the BTC supply.
The ability to enter a BTC position is called “buying power.” Currently, that buying power is high, meaning stablecoin owners can purchase a comparatively large amount of the supply.
“SSR is 3x stronger than it was when BTC hit these price levels over a year ago,” Glassnode commented.
In another tweet, the firm noted that the largest stablecoin, Tether (USDT), was conspicuously primed to enter such positions.
As Cointelegraph reported, Tether’s market cap passed a landmark $10 billion in July. In terms of average daily transfer value, USDT beat both Bitcoin and PayPal this month.
One reason for increasing the supply and, therefore, the market cap of a stablecoin, is to allow investors who purchased other assets to cash out. As Glassnode explained in a blog post about SSR last December, an increase in BTC price, for example, requires more stablecoins.
“The resulting lack of liquidity in the stablecoin supply makes it harder for investors in profitable positions to exit,” the post summarizes, concluding: