Bitcoin crash pre-halving? Stablecoin metric that marked 2019 top flashes warning

Bitcoin (BTC) is at 17-month highs with just 164 days until the next Bitcoin halving event, alongside anticipation of an area Bitcoin exchange-traded fund (ETF) approval in the coming months.Yet, amid Bitcoins 106.38% year-to-date gains, the stablecoin supply rate oscillator (SSRO) has actually raised a significant flag regardless of suggesting the start of a brand-new bull cycle.Stablecoin purchasing power damages ahead of Bitcoin ETFThis stablecoin supply ratio metric, which serves as an important measure of the supremacy of stablecoins vs. Bitcoin, has surged to a brand-new all-time high at 4.13 on Oct. 25, according to data from Glassnode. Such a rise tips at a considerable cravings for Bitcoin accumulation on-chain. The SSRO hit a new all-time high at 4.13 on Oct. 25. Source: GlassnodeHowever, this also recommends that the acquiring power of stablecoins is at a relative all-time low.Historically, this is the greatest SSRO divergence because 2019, when it soared approximately 4.12 on June 26– precisely 320 days before the May 2020 halving.The emergence of this exact same leading signal on the SSRO today could, for that reason, precede a retracement duration before the next halving occasion in April 2024. While the relative purchasing power is currently weak– and a regional top like the one in 2019 is definitely possible– the bigger implication is that high SSRO levels have actually likewise lined up with the start of larger bull market cycles.”Reserve risk” recommends this BTC rally might be differentAs a prospective area Bitcoin ETF approval entices markets with implications for BTCs price, one metric is painting a distinct picture of market sentiment, suggesting this Bitcoin rally could be various from 2019. Particularly, the reserve risk (RR) indicator, which measures the risk-reward incentives in relation to the existing “HODL bank” and identify BTC price. As Glassnode puts it: When confidence is high and price is low, there is an attractive risk/reward to invest (Reserve Risk is low). When confidence is low and rate is high then risk/reward is unappealing at that time (Reserve Risk is high).”The RR sign determines the risk-reward incentives in relation to the current “HODL bank” and spot BTC price. Source: GlassnodeWhen the SSRO sped up to likewise high levels in June 2019, the RR did the same, climbing up above the green band, as shown in the chart above.Yet, in the middle of the existing record-high SSRO reading, the RR is still at multiyear lows at the bottom of the green band. Historically, buying Bitcoin when the RR is at such low levels (i.e., big hodl bank relative to present BTC price) has actually produced outsized returns.It likewise suggests that in spite of the Bitcoin price sitting at 17-month highs, self-confidence remains really high in Bitcoins future cost performance.Thus, long-term holders may be well-positioned for significant gains, thinking about these entities control an all-time high of the total supply. Consider the potential multibillion-dollar inflows into a Bitcoin ETF, and its simple to see why six-figure BTC price predictions are ending up being typical for the post-halving duration. This post does not consist of financial investment recommendations or recommendations. Every investment and trading move involves risk, and readers must conduct their own research study when deciding.

Other Questions People Ask

What does the stablecoin supply rate oscillator indicate about a potential Bitcoin crash pre-halving?

The stablecoin supply rate oscillator (SSRO) has recently surged to an all-time high, suggesting a significant appetite for Bitcoin accumulation. However, this spike also indicates that the purchasing power of stablecoins is at a relative low, which historically precedes a price retracement. This pattern mirrors the situation in 2019, where a similar SSRO peak occurred before a notable Bitcoin price drop ahead of the halving event.

How might the current Bitcoin rally differ from the 2019 crash pre-halving?

While the SSRO is signaling a potential retracement similar to 2019, the reserve risk (RR) indicator presents a contrasting picture. Currently, the RR is at multiyear lows, indicating that despite high prices, confidence in Bitcoin's future performance remains strong. This suggests that long-term holders may be well-positioned for gains, differing from the sentiment leading up to the 2019 crash.

What implications does the stablecoin metric have for Bitcoin's price before the halving?

The recent rise in the stablecoin supply ratio indicates that while there is significant interest in accumulating Bitcoin, it also reflects a weakening purchasing power among stablecoins. This divergence could foreshadow a price correction before the upcoming halving in April 2024. Investors should be cautious, as historical patterns suggest that such conditions often lead to local price tops.

Can the current market conditions lead to a Bitcoin crash before the halving event?

Given the current high levels of the SSRO and low purchasing power of stablecoins, there is a possibility of a Bitcoin crash before the halving. The historical context shows that similar conditions preceded price corrections in 2019. Therefore, while optimism exists due to potential ETF approvals, investors should remain vigilant and consider market signals indicating a possible downturn.

What should investors consider regarding Bitcoin's future performance and potential crash risks?

Investors should closely monitor both the SSRO and RR indicators as they provide insights into market sentiment and potential price movements. The high SSRO suggests caution, as it may indicate an impending correction similar to 2019. However, the low RR indicates strong confidence among long-term holders, which could lead to significant gains post-halving if market conditions stabilize.