Cryptocurrency data analysis platform CryptoQuant has announced the emergence of a striking on-chain signal following the recent sharp drop in Bitcoin.
According to the company, Binance’s “Bitcoin/Stablecoin Reserve Ratio” has fallen to 1.008, breaking its lowest level since 2018.
According to CryptoQuant data, this low ratio indicates that the amount of stablecoins on the exchange has reached extraordinary levels compared to Bitcoin’s reserves. In other words, Binance is boasting its highest purchasing power accumulation in six years.
According to the analysis, stablecoin reserves indicate that the pending purchasing power of so-called “dry powder” has reached historic highs. This, analysts say, suggests that the liquidity necessary for a potential upward movement is accumulating in the exchange.
CryptoQuant noted that historical data has shown strong Bitcoin rallies occurring at similar levels. The report stated, “History shows that such low reserve ratios often precede strong Bitcoin rallies.”
Analysts argue that the dominance of stablecoins relative to Bitcoin suggests the market is “ready to unlock.” In other words, with a decrease in selling pressure or positive macro news, the market is poised to see a rapid increase in demand for Bitcoin.
*This is not investment advice.