An on-chain indicator suggests that investment interest in Bitcoin (BTC) may be waning.
The “Exchange Stablecoins Ratio (ESR)” provided by CryptoQuant – the exchange’s bitcoin reserves divided by the exchange’s holdings of stablecoin reserves – has been increasing since May 2021. has risen to a high level of
This metric is typically an indicator of potential buying/selling pressure. A drop in ESR indicates an increase in exchange stablecoins relative to Bitcoin reserves. An increase in ESR is the opposite.
Stablecoins are mainly used to buy crypto assets, so the lower the ratio (= more stablecoins), the higher the buying pressure.
The recent rise in the ratio suggests that investors are moving less stablecoins to exchanges, more Bitcoin, or both at the same time.
Both points to the possibility that selling pressure is increasing as investors feel uneasy about the current investment environment following bank failures in the United States and tighter regulations on crypto assets.
Investors preparing to sell
The timing of the relative decline in stablecoin supply coincided with Bitcoin price gains of more than 30% since March 10, but this was before things got worse.
In theory, if investors expected more upside after a price rally, stablecoin movements to exchanges should increase further.
Instead, the sharp rise in the ratio as the bitcoin price rises means that at least investors are ready to sell quickly if bitcoin goes down. .
One example of such an event is the US Commodity Futures Trading Commission (CFTC) lawsuit against Binance and CEO Changpong Zhao. Following the lawsuit, Bitcoin fell sharply in the hours that followed.
Another on-chain indicator is also showing investor caution. “aSOPR (adjusted spent output ratio)”, which shows the profit rate of Bitcoin, indicates that investors are making a profit and selling when it exceeds 1.0, and when it is less than 1.0, investors are making a loss. indicates
The current 1.0452 points to the former. In general, selling an asset for a profit is viewed positively, but taking profits while the price is rising raises concerns about a stalling of the rally.
｜Translation: coindesk JAPAN
｜Editing: Takayuki Masuda
｜Original: On-Chain Stablecoin, Profitability Ratios Signal Investor Caution