Cryptocurrency analytics firm Alphractal has issued a bullish signal for Bitcoin, citing a key indicator that suggests an optimal accumulation phase is approaching.
In a recent statement, the company provided important information about the Stablecoin Rate Channel, a metric that has historically identified strong buying opportunities for Bitcoin and altcoins.
Alphractal noted that the total market capitalization of stablecoins has been steadily increasing due to new issuances and capital rotation from altcoins to stable assets. This increase plays a crucial role in determining Bitcoin’s market trends.
“When the stablecoin reaches the lower dotted line of the Rate Channel, it has historically signaled an excellent entry point for investors,” the firm’s analysts said. “This pattern suggests that there is a significant amount of stablecoins in the market relative to Bitcoin’s market cap, and this often occurs before the Bitcoin price declines and then recovers.”
The Stablecoin Rate Channel (long-term) is designed to smooth out short-term volatility using the 90-day Relative Strength Index (RSI) applied to the Stablecoin Supply Ratio (SSR) Oscillator and further refined with a 7-day Exponential Moving Average (EMA).
The key components of the SSR Oscillator include:
- Stablecoin Supply Ratio (SSR): This is calculated by dividing Bitcoin's market cap by the stablecoin market cap and further smoothing it with the 200-day Simple Moving Average (SMA).
- Bollinger Bands Analysis: ±2 standard deviation bands help identify overbought and oversold conditions.
Oscillator Signals:
- Blue Signals: Indicates low oscillator values and usually corresponds to major bottom signals.
- Red Signals: High oscillator values that signal potential market trend changes.
While the exact timing remains unclear, Alphractal explained that the current setup closely resembles previous accumulation zones that preceded Bitcoin price increases. “A major buy signal has yet to materialize, but based on historical trends we are rapidly approaching an ideal accumulation phase,” the statement said.
*This is not investment advice.
