Stablecoins’ growing market cap is great for Bitcoin only if…

• The purchasing power of the market rose as stablecoins’ combined market cap spiked
• Bitcoin can gain from greater stablecoin whale supply

The market cap of stablecoins including Tether [USDT], Circle [USDC], DAI, and others, grew significantly during the week. This hike was significant to the price appreciation Bitcoin [BTC] recorded, according to Santiment.

Realistic or not, here’s USDC’s market cap in BTC terms

Buyers are getting ready for BTC

In a recent post, the on-chain analytics platform explained how the growth implies a surge in the purchasing power of the broader market. However, it was also quick to point out that the strength of whales’ accumulation of stablecoins has not yet been reflected on the market.

💸 The combined market caps of #stablecoins $USDT, $USDC, $BUSD, $DAI, $TUSD, & $USDP surged this past week, increasing buying power that assisted #Bitcoin to #30K. More sustained rises will come when whales accumulate stablecoins while $BTC remains flat. https://t.co/Fh16oIzHUI pic.twitter.com/UX9YjGZNJB

— Santiment (@santimentfeed) October 20, 2023

Santiment also shared that Bitcoin’s price may rise well above $30,000. However, this might only happen when whales begin putting their buying power into use. Although on-chain data revealed that whales currently hold about 50 % of the total stablecoin supply, a hike in the market share could be the stimulant Bitcoin needs to neutralize the doubt around its possible hold on the $30,000-level.

A look at the Stablecoin Supply Ratio (SSR) underlined that the metric has risen of late. Using the supply of stablecoins including USDC, USDT, BUSD, and the rest, the SSR is the ratio between Bitcoin’s supply and the supply of stablecoins denoted in BTC.

The result of this calculation serves as a proxy for the supply/demand mechanics between BTC and USD. At the time of writing, the SSR was 4.78 between the upper band of 4.88 and the lower band of 3.97 of the Bollinger Bands (BB).

Source: Glassnode

Volatility could explode if whales…

What this means is that volatility around Bitcoin’s price is decreasing while buying power is increasing. Should market participants go all in on buying BTC, then the volatility level may change from contraction to expansion.

Meanwhile, Bitcoin’s 30-day Market Value to Realized Value (MVRV) ratio was 7.25% at press time. The MVRV ratio is defined as an asset’s market cap divided by the realized capitalization. By comparing these values, investors can have an idea about the period of fair value, or undervaluation

At the said value, the metric revealed that the coin’s recent performance has produced good gains for its holders. Still, the market may not be deemed extremely heated at the moment, especially considering how long BTC’s price has stayed below $30,000 on the charts. 

Source: Santiment

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

Irrespective of the sentiment in the market, investors may need to thread with caution. Also, the stablecoin supply worth more than $5 million held by whales has only started to move upwards. If the metric spikes like it did around August, then BTC could be worth much more than it currently is.