“The upcoming Bitcoin halving has ignited anticipation and excitement in the crypto community, but a cautionary signal from the stablecoin metric, which accurately predicted the market’s top in 2019, is flashing a warning sign for a potential Bitcoin crash pre-halving.”
Bitcoin is currently experiencing a surge in price, reaching 17-month highs. With just 164 days until the next Bitcoin halving event and the potential approval of a Bitcoin exchange-traded fund (ETF), anticipation is high in the cryptocurrency market. However, despite Bitcoin’s impressive year-to-date gains, the stablecoin supply rate oscillator (SSRO) has raised concerns.
The SSRO, which measures the dominance of stablecoins versus Bitcoin, has reached a new all-time high. This suggests a significant appetite for Bitcoin accumulation on-chain but 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, which could signal a retracement period before the next halving event in April 2024.
On the other hand, the reserve risk (RR) indicator paints a unique picture of market sentiment. While the SSRO is at record levels, the RR remains at multiyear lows. Historically, buying Bitcoin when the RR is at such low levels has resulted in significant returns. This implies that despite the current high price of Bitcoin, confidence remains very high in its future performance.
Long-term holders, who currently control an all-time high percentage of the total supply, may be well-positioned for major gains. Additionally, the potential inflows into a Bitcoin ETF could further boost the price of Bitcoin, leading to predictions of six-figure price targets.
It’s important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment decisions.