- Bitcoin had a sharp rally in early May.
- The decline below the SSR oscillator bands was seen then, but will we see a longer rally here?
Bitcoin [BTC] was trading at $67k at the time of writing and was in danger of breaking out past the range within which it has been consolidating over the past month.
The fear of a sell-off around the half-life period lost steam.
Bitcoin ETFs There was also an influx last week, indicating a tangible increase in demand. The push to the range highs eased the selling pressure of recent weeks, but can the bulls pull off a breakout?
Measuring the bulls’ ammunition reserves
a crypto analyst marked in a message on X (formerly Twitter) that the stablecoin supply ratio (SSR) oscillator was bullish.
The technical indicator assesses the market sentiment of stablecoins against Bitcoin over time.
It is calculated by taking the current SSR and the difference from the 200 period simple moving average. This value is divided by the standard deviation over the same period to arrive at a series of Bollinger Bands (BB).
The current supply of stablecoins is plotted across these bands to give traders insight into what market sentiment is like.
When the SSR falls below the lower Bollinger Band, it indicates low stablecoin dominance and potentially bullish sentiment.
The chart above shows how the market tends to retreat when the oscillator overheats. Conversely, when the lower bands are broken, it generally presents a good buying opportunity in the long term.
Like any other technical indicator, the SSR oscillator was not infallible, and every signal did not guarantee a price move in the expected direction.
We are still within a buy signal
The stablecoin supply ratio was below the SMA with a period of 200, but above the lower BB. It fell below this band in early May, when the Bitcoin price reached $56,000. However, the price immediately bounced higher.
The oscillator was still in the lower BB suggesting further gains were likely. The SSR also experienced a downward trend in the past month.
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The statistic has been on an aggressive upward trend since October 2023. Periods of stagnation or decline, such as early January and mid-May, were present.
A month after the January pullback, Bitcoin prices shot up, easily breaking the $46,000 resistance. Perhaps in the next 2 to 4 weeks we will see a Bitcoin rally that goes well beyond the $73,000 resistance.