New Bitcoin-Stablecoin Metric Reveals ‘Intense’ Buy Pressure – Analyst

Bitcoins are the virtual currency system, in which the transactions take place over the Internet. They have a distributed payment method, which requires no intervention of third-parties like a bank or any other central government agencies. Satoshi Nakamoto is the founder of bitcoins, who stated that Bitcoins are digital cash, which can be stored in digital wallets, and the transactions can be made directly between the senders and buyers without any banks in the middle.


Bitcoin Price Index

Generally, the Bitcoins values are given in USD, but the users can also exchange with other base values like Russian Roubles, yen, Japanese, Euro, and British pounds. The market data for the Bitcoin comprises trading volume, daily changes, weekly changes, monthly changes, market capitalization, lowest prices, highest prices, and total supply. To find out the Bitcoin value, you can get the information from renowned Cryptocurrency exchanges like Okex, HitBTC, CoinBase, Bitstamp, Binance, and Bitfinex. By choosing the checkbox options, you will be able to view the price value of Bitcoins. You can also view various views like the Line chart, OHLC, and Candlestick.

Bitcoin metric reveals ‘intense’ buy pressure

A research was conducted in that; it was seen that, based on the new Bitcoin metric, the investors are more interested in buying than selling at $10,000. A new tool for tracking Bitcoin investor sentiment was discovered by Ki-Young Ju, the founder of on-chain analytics resource CryptoQuant on September 7, 2020.

This tool dies by taking total BTC reserves divided by stablecoin reserves. The result after this operation results in how much the trader is interested in buying, where there are more profits. From the results, it was found that Bitcoins buying pressure was more, where the exchanges are having more stablecoin and lesser Bitcoins when compared to the starting months of the year. Ki-Young Ju imposed a condition that the investors will be able to exchange stablecoin to buy any other cryptocurrencies other than Bitcoins and to buy at low pricing, they can hold Tether USDT.

What is Tether?

Tether is a Cryptocurrency, which is a fusion between the Cryptocurrency and fiat currency. They are connected to the value of the fiat currency. The currency type used by Tether is USD, which has the same value as that of USD.  The Tether cannot be used for investment, due to inflation in the USD pricing, and it has the same value as that of USD, so there is no much interest in investing in Tether. But there are few attractive features of Tether. The transactions made with Tether take place in very few minutes, and there are no transaction fees for transacting between Tether wallets. Even if there are any risky circumstances in the market, the Tether is a very steady and quick reserve for cash in and cash out.

Booming of stablecoin and decline in BTC reserves

In the recent trend of Bitcoins, has found a decline, whereas the stablecoin (Tether Cryptocurrency) has found a total market cap of $14 billion. As per Glassnode’s stablecoin supply ratio (SSR), the stablecoin is three times stronger than Bitcoins as per the ratio, in August than in June 2019. It was found that there is a lot of fluctuation in the BTC values, and hence there is a decrease in the BTC reserves.

What is a stable coin?

The stablecoin is a new Cryptocurrency that has stable pricing and is sponsored by reserve assets. The stablecoin stood first as it offers stability, flexibility, security, and quick transactions. The price values of the Cryptocurrency are pegged to some other currencies like the U.S. dollar or gold. Through backing or through buying and selling algorithmic mechanisms, they can achieve price stability. The stablecoin faced lots of price changes, where the value of a stablecoin was $5950 in November 2019, and in the next month, the value was $19,700. Then later on in February 2020, the value declined to $6900.

So, lots of Cryptocurrency, including the Bitcoins, are declining to this short term fluctuation in the Bitcoin values. Any kind of currency should possess the following features:

  • a medium of financial exchange
  • storage for monetary value
  • The value should not fluctuate for a longer period.

A crypto-coin should encourage people to buy more than saving them. This can be achieved only if the crypto coin has a low inflation rate. The stablecoin has achieved these criteria, as it has a stable price value.

What are the reasons for the stable price value for stablecoin?

Because of the reserves that back the fiat currencies and the governing authorities like central banks, the fiat currency can attain price stability. The stablecoin is free from fluctuations due to the tethering of fiat currency and other assets like gold that are backed by controlling authorities. Even if the fiat currency has fluctuation, the central government authorities will take control, to bring stability in the price value. The stablecoin acts as the medium to bridge the gap between fiat currencies and stablecoin.

Fiat-collateralized stablecoins

The fiat currencies, maintain collateral such as U.S. dollars, gold, or silver. The fiat-collateralized stablecoin reserves are maintained by the self-governing curators, and they are frequently audited.  Tether USD and TrueUSD have the same price value as that of U.S. Dollars.

Crypto- collateralized stablecoins

The crypto-collateralized stablecoins are backed by various cryptocurrencies. As the cryptocurrencies also tend to fluctuate frequently, so that very few number stablecoins will be issued for a large number of cryptocurrencies. For instance, for issuing $1000 stablecoins, $2000 worth Cryptocurrency has to be backed.

Algorithmic stable coins

This type of stablecoins process is based on the working mechanism like banks without depending upon the reserves. For instance, based on the requirements, a consensus mechanism will be used for rising or declining the supply for a dollar-pegged basecoin. This Algorithmic approach is similar to the central banks, which prints the banknotes, to maintain the appraisal of fiat currency. This type of stablecoin mechanism can be achieved through a decentralized smart contract that functions independently.

Pros of stablecoins

The following are the pros of stablecoins. They are:

  • They use blockchain technology, and due to its vast price volatility, it attracts more users to use cryptocurrencies.
  • They are most desired by people, as there are no banks or any government authorities to control. So that the transactions are very quick and to make stablecoin transactions between stablecoin wallet, the buyers or sellers need not want to pay any transaction fee. Even the international transaction is also very less, making the investors choose
  • The stablecoin encourages the operation in a decentralized manner.
  • The decline rate will also be less with stablecoins. On January 1, 2018, when another Cryptocurrency had a drop in market value to 30-70%, the stablecoin had only an 8% drop.


The following are the cons of stablecoins:

  • If the investor bought 100 stablecoins for $100, after five years also, the value does not change.
  • The pricing of stablecoins depends on backed-up asset values and fluctuations.
  • There is a chance of stealing of stablecoins from bank

Thus, this article has given a deep insight into Bitcoins and stablecoins and how the stablecoins can maintain price stability.

Leave a Reply