The Stablecoin Supply Rate (SSR), a key market metric, has been steadily rising since the beginning of the year, indicating a decline in the purchasing power of stablecoins.
SSR is an indicator that provides insight into the supply and demand dynamics between Bitcoin (BTC) and the US dollar. Calculating the SSR involves dividing the total supply of stablecoins by the market cap of Bitcoin.
A low SSR indicates high purchasing power of the stablecoin. This means that for every dollar represented by a stablecoin, you can buy a larger portion of Bitcoin’s market capitalization.
On the other hand, a high SSR suggests low purchasing power of the stablecoin. In this scenario, each dollar represented by the stablecoin buys a smaller portion of Bitcoin’s market capitalization.
The SSR is an important metric as it provides a snapshot of a stablecoin’s potential purchasing power in the Bitcoin market. This helps traders and investors understand whether the market is currently dominated by dollar-pegged stablecoin holders or bitcoin holders.
Since the beginning of the year, the SSR has increased from 2.36 to 4.65. This sharp increase indicates that the purchasing power of stablecoins has declined significantly. This trend has occurred in parallel with the rising price of Bitcoin.
Considering the recent surge in SSRs, it is worth noting that the supply and prominence of certain stablecoins have increased significantly. As we covered in our previous CryptoSlate analysis, the circulating supply of Tether (USDT) and TrueUSD (TUSD) reached all-time highs this year.
At the end of July, Tether’s supply hit a record high of $83.89 billion, while TrueUSD’s supply peaked at $3.04 billion. These two stablecoins are of particular importance as they make up the majority of cryptocurrency-stablecoin trading pairs on centralized exchanges.
The impact of this SSR increase is multifaceted and requires careful analysis. On the one hand, the growing supply of stablecoins indicates a strong demand for these assets, often used as a safe haven during market volatility.
On the one hand, the rising SSR suggests that the purchasing power of stablecoins over Bitcoin is declining. This could lead to a decrease in Bitcoin demand, which in turn could put downward pressure on the Bitcoin price.
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