According to on-chain data, the Bitcoin “Supply Stress Ratio” has recently increased to 0.23, signalling possible challenges ahead for its market. This indicator measures how much of Bitcoin supply is experiencing losses at present – providing insight into market stress levels and providing unique perspectives into market stress levels.
Exploring the Rise in Bitcoin’s Supply Stress Ratio
Glassnode recently conducted an analysis that highlighted an upward trend in the Supply Stress Ratio for Bitcoin. This ratio measures how much supply has been lost relative to total supply, providing investors and analysts with an indicator of market sentiment and financial state of holders. Public blockchain data allows tracking transactions as well as assessment of profitability or loss status of coin holders making such analyses possible.
Realized Price plays a central role in this context. It refers to the last price at which a coin changed hands, acting as an indicator of its cost basis for holders. Comparing its Realized Price against current market prices allows one to ascertain whether Bitcoin is predominantly held profit or loss and provides data that allows Supply Stress Ratio’s evaluation to calculate its value.
Zero values for this indicator typically indicate all Bitcoin holdings are profitable and there is no market stress, typically only occurring when its price reaches new heights. Conversely, an indicator with higher numbers suggests a portion of supply being held at loss indicating increased market stress.
Recent increases to the Supply Stress Ratio to 0.23, its highest point since September, has been taken as a signal of increased market stress. Values above 0.2 have historically signaled periods of intense market pressure. Furthermore, analysis showed that Bitcoin spot prices are trading significantly below its Realized Price for Supply in Loss; further reinforcing investor anxieties regarding holding coins at losses.
Bitcoin’s price has remained fairly stable around $83,000 for most of this week. This stability raises questions regarding its direction going forward and whether further declines could increase Supply Stress Ratios.
Insight on BTC Price Stability
Bitcoin’s recent sideways trading pattern shows a market in transition, with its price hovering near $83,000 for much of 2017 and 2018. This period of flat returns has caused speculation on the potential future trajectory and effects of Bitcoin on investor sentiment and market conditions.
