Bitcoin at Crossroads Between Rebound and Further Decline as Stablecoin Supply Emerges as Key Variable

Summary

• Bitcoin is at a crossroads between a rebound and further declines, with changes in stablecoin supply identified as a key variable that could determine its next price direction.
• According to CryptoQuant, Bitcoin’s Stablecoin Supply Ratio (SSR) is currently neutral and has entered a phase where markets should watch for a death cross.
• It emphasized that future changes in stablecoin supply and the technical trend in SSR will be key indicators for judging Bitcoin’s short-term price direction and whether additional downside pressure or a rebound lies ahead.

Forecast Trend Report by Period

Bitcoin is at a crossroads between a rebound and further declines, with changes in stablecoin supply emerging as a key variable that could determine its next price direction.

CW, a contributor to on-chain analytics platform CryptoQuant, wrote on Nov. 10 that Bitcoin’s Stablecoin Supply Ratio, or SSR, remains in neutral territory and has entered a phase where markets should watch for a death cross.

SSR measures Bitcoin’s market capitalization relative to the market capitalization of stablecoins. The gauge is used to assess the market’s potential buying power. In general, a lower SSR means stablecoins have increased relative to Bitcoin, signaling that liquidity available for purchases has expanded.

“Bitcoin’s SSR is currently in a neutral state,” CW wrote. A death cross has not yet occurred, but the indicator is hovering near the threshold. A death cross refers to a short-term moving average falling below a long-term moving average, a pattern typically viewed in technical analysis as a bearish signal.

Changes in stablecoin supply were identified as the key factor that will shape Bitcoin’s next move. If supply expands, potential buying power in the market could increase and support a rebound in Bitcoin. If supply contracts, shrinking liquidity could intensify pressure for further declines.

Still, a drop in SSR does not necessarily lead to a price increase. That is because changes in Bitcoin’s market capitalization also affect the indicator, and growth in stablecoin supply may not translate into actual buying demand.

CW emphasized that whether Bitcoin rebounds or posts a deeper decline depends on how stablecoin supply changes. Against that backdrop, the technical trend in SSR and shifts in stablecoin supply are likely to be key indicators for gauging Bitcoin’s short-term direction.

Suehyeon Lee