Bitcoin Rally Driven by 200% Increase in Investor Purchasing Power

Bitcoin's latest rally has been supported by a stronger purchasing power among investors, according to a recent report. The on-chain analytics firm Glassnode highlighted this trend in its latest weekly report, focusing on the Stablecoin Supply Ratio (SSR) of Bitcoin. The SSR measures the ratio between the Bitcoin supply and the supply of stablecoins, which are cryptocurrencies pegged to a fiat currency, in this case, the US Dollar.

Stablecoins play a crucial role in the digital asset ecosystem, serving as the primary trading asset across both centralized and decentralized platforms. They represent readily available capital, or "dry powder," for digital asset purchases. The SSR compares the Bitcoin supply against this available dry powder, indicating the investor's purchasing power. A high SSR value suggests weak purchasing power due to a high BTC supply relative to stablecoins, while a low SSR value indicates high purchasing power due to abundant dry powder relative to BTC supply.

The report emphasizes the SSR Oscillator, a modified indicator that measures how the 200-day Simple Moving Average (SMA) of the SSR moves within the Bollinger Bands. The SSR Oscillator has been close to the zero mark in recent weeks, indicating neutral investor purchasing power compared to the BTC supply. This trend differs from the rally beyond $100,000 late last year, when the SSR Oscillator had a highly positive value, suggesting low stablecoin supply relative to BTC.

Despite Bitcoin currently trading around the same levels as during the previous rally, the SSR Oscillator's shift suggests that investor purchasing power has improved markedly. This reflects stronger underlying demand conditions, supporting the current rally. The report notes that the neutral SSR value indicates that investors have stronger purchasing power today than during the previous bull rally.