Stablecoin Metrics Show Bitcoin Rally May Be Far From Over

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Bitcoin has weathered a turbulent beginning to 2025, but signs point to a powerful resurgence. After dropping 11.82% in the first quarter, BTC surged 31.41% in Q2—reigniting investor confidence and raising a critical question: Is this rally just getting started?

Emerging on-chain data suggests the answer may be yes. In particular, stablecoin metrics are painting an increasingly optimistic picture of market dynamics, indicating that the current bullish cycle could have several more months of momentum ahead.

How Stablecoins Reveal Market Sentiment

Stablecoins—digital assets pegged to fiat currencies like the U.S. dollar—serve as the lifeblood of crypto trading and liquidity. Because they bridge traditional finance with blockchain ecosystems, their behavior offers unique insights into investor psychology, capital flows, and potential market turning points.

Joao Wedson, Founder and CEO of Alphractal, recently spotlighted three key indicators rooted in stablecoin activity that suggest Bitcoin remains far from overbought:

These tools analyze Bitcoin’s valuation relative to the total supply of stablecoins—essentially measuring how much “dry powder” (i.e., readily available purchasing power) exists in the market.

“None of these metrics currently indicate overbought conditions, suggesting that Bitcoin (and other cryptos) could continue rising for a few more months,” Wedson noted in a widely shared analysis.

Let’s break down what each metric reveals.

The SSR Oscillator: A Compass for Market Cycles

The Stablecoin Supply Ratio Oscillator compares Bitcoin’s market capitalization to the total market cap of major stablecoins (like USDT, USDC, DAI), smoothed using a 200-day moving average and standard deviation bands.

This ratio acts as a gauge of market sentiment:

As of mid-2025, the SSR Oscillator has not yet approached historical sell zones. This implies there’s still significant room for upward movement before reaching speculative extremes.

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Long-Term Stablecoin Ratio Channel: Macro Perspective

The Stablecoin Ratio Channel (Long-Term View) expands this analysis over multi-year cycles. It helps identify structural shifts in market valuation by comparing Bitcoin’s price trajectory against stablecoin liquidity trends.

When the ratio dips below its long-term support band, it often marks accumulation phases—times when whales and institutions quietly build positions. Conversely, spikes above resistance levels have historically preceded corrections.

Current data shows Bitcoin comfortably within healthy valuation ranges—neither deeply undervalued nor excessively overvalued. More importantly, no sustained breakout above upper resistance has occurred, which would typically warn of a top formation.

This absence of overextension supports the idea that the bull run remains intact and structurally sound.

Short-Term Stablecoin Ratio Channel: Tactical Momentum Signals

For traders focused on shorter horizons, the Short-Term Stablecoin Ratio Channel provides actionable momentum signals. With higher oscillation frequency, this tool captures swing trading opportunities driven by shifts in liquidity.

Since early 2025, the short-term channel has generated multiple “buy” signals—coinciding with the start of Bitcoin’s recovery phase. These signals reflect renewed confidence and capital inflows from both retail and institutional participants.

Together with the longer-term indicators, they form a cohesive narrative: the ecosystem is still in accumulation mode, with ample fuel left in the tank.

Broader Ecosystem Strength Confirms Momentum

Bitcoin isn’t moving in isolation. According to Coinglass, Ethereum also posted a robust 37.04% gain in Q2 2025—underscoring broad-based strength across the top-tier digital assets.

This synchronized rally suggests systemic demand rather than isolated speculation. Moreover, decentralized finance (DeFi), layer-2 networks, and real-world asset tokenization projects are seeing increased usage—all funded largely through stablecoin-denominated transactions.

A thriving stablecoin infrastructure enables faster settlements, reduces counterparty risk, and enhances market depth. With global adoption accelerating, even conservative estimates project the stablecoin market could reach $2 trillion by 2028, according to U.S. Treasury forecasts.

However, challenges remain—particularly around regulation.

Regulatory Risks and Systemic Dependencies

While stablecoins offer stability and efficiency, their centralized nature makes them vulnerable to policy shifts. The U.S., EU, and other jurisdictions are advancing stricter oversight frameworks that could impact issuance, redemption mechanisms, or cross-border transfers.

Such regulatory volatility introduces uncertainty—but not necessarily bearish outcomes. In fact, clearer rules could enhance trust and attract more institutional capital in the long run.

Until then, investors should monitor:

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Core Keywords Driving This Narrative

To align with search intent and improve discoverability, here are the primary keywords naturally embedded throughout this analysis:

These terms reflect what active investors and traders are searching for: data-driven insights into whether Bitcoin’s uptrend is sustainable—and how to position accordingly.

Frequently Asked Questions (FAQ)

What is the Stablecoin Supply Ratio (SSR) Oscillator?

The SSR Oscillator measures Bitcoin’s market cap relative to the total supply of stablecoins. By applying statistical smoothing (200-day MA and standard deviation), it identifies undervalued or overvalued conditions in the market cycle.

Why are stablecoins important for Bitcoin price movements?

Stablecoins represent liquid capital ready to enter the crypto market. High stablecoin supply on exchanges often precedes buying pressure, while rapid withdrawals can signal accumulation or upcoming volatility.

Does a low SSR mean Bitcoin will go up?

Not immediately—but historically, low SSR readings correlate with early-to-mid stages of bull markets. It suggests investors hold more stablecoins than BTC, indicating room for re-allocation into risk assets.

Can regulation affect stablecoin-based indicators?

Yes. If regulators restrict stablecoin issuance or freeze reserves (e.g., during financial stress), it could distort supply metrics temporarily. However, leading indicators like SSR account for long-term trends, making them resilient to short-term shocks.

How reliable are on-chain metrics like the Stablecoin Ratio Channel?

On-chain data is transparent and immutable, offering high reliability. When combined with price action and macroeconomic context, these metrics provide strong probabilistic signals—though not guarantees.

What should investors do now based on these signals?

Given that none of the key stablecoin metrics show overbought conditions, maintaining exposure or gradually scaling into positions may be prudent. Traders might also watch for breakout patterns or divergences in coming weeks.

👉 Access real-time dashboards tracking SSR, stablecoin flows, and more.

Final Outlook: Bull Run Still in Motion

Despite a rocky start in 2025, Bitcoin’s Q2 rebound—supported by favorable stablecoin dynamics—suggests the broader bullish cycle remains alive.

With no clear signs of overheating across key on-chain indicators, and both short-term and long-term stablecoin ratio channels favoring continued upside, the path forward looks constructive.

While regulatory scrutiny looms, increasing institutional adoption and expanding use cases for stablecoins point toward long-term resilience.

For investors and traders alike, the message is clear: the rally may be far from over—and those who understand the underlying metrics stand to benefit most.