Bitcoin [BTC] takes a trip back to the COVID era — Here’s how

  • Taker buy/sell ratio spikes, indicating the neutralization of the sell-offs.
  • The Stablecoin Supply Ratio decreased, implying how the market has refrained from buying BTC.

The recent price movements of Bitcoin [BTC] have raised comparisons to the volatile period during the onset of the COVID-19 pandemic. Often considered a store of value and a hedge against economic uncertainties, Bitcoin experienced significant price fluctuations between 2019 and 2021, and this swing in prices laid the grounds for its $69,000 All-Time High (ATH) in 2021.

Read Bitcoin’s [BTC] Price Prediction 2023-2024

BTC: Back to the pandemic 

Korean on-chain analyst Mignolet, in his latest CryptoQuant publication, did not point out a possible movement for a price hike. Instead, he used the taker buy/sell ratio to explain the resemblance between Bitcoin’s consolidation in this cycle, and as of then.

The taker buy/sell ratio is calculated as the buy volume divided by the sell volume in perpetual swap traders. When the ratio is above 1, it means that bullish sentiment is dominant. On the other hand, values under 1 suggest a bearish sentiment. 

According to Mignolet, the taker buy/sell ratio spiked as it did around April 2023. The analyst highlighted that BTC consolidated around that price due to the sudden spike. However, the extensive involvement of whales afterward triggered the price rise months later. So, will it be the same case this time?

Source: CryptoQuant

Lately, Bitcoin has been consolidating between $25,000 and $26,000. This has been the case since the severe sell-offs experienced a few weeks back. But upon considering the seller exhaustion constant, Glassnode showed that it rose to 0.0078.

The seller exhaustion constant uses the percentage supply in profit and 30-day price volatility when there are high losses or low-risk bottoms. To confirm increasingly high losses the seller exhaustion constant and supply in profit need to align. 

But at the time of writing, while the percentage supply in profit decreased, seller exhaustion constantly increased. This was a sign that the sellers’ control had diminished. Therefore, BTC is not expected to plunge significantly.

Bitcoin seller exhaustion constant

Source: Glassnode

Consolidation because…

And since there was a dearth of buyers in the market, the coin would only continue to hover around the aforementioned values. 

Another metric that confirms that decrease in buying power is the Stablecoin Supply Ratio (SSR). This metric is defined as the ratio between Bitcoin supply and the supply of stablecoins, denominated in BTC. 

How much are 1,10,100 BTCs worth today?

When the SSR is low, the current stablecoin supply has more buying power to purchase BTC. As an indicator of the supply/demand mechanics between BTC and USD, a decrease in the SSR like it was at press time, suggests a fall in buying power.

Bitcoin stablecoin supply ratio

Source: Glassnode

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