There’s a lot of dry powder in the crypto market just as Bitcoin (BTC) is showing a historical bottom indicator, according to popular on-chain analyst Will Clemente.
In a new installment of the Blockware Intelligence newsletter analysis, Clemente tracks the combined market capitalization of the two biggest stablecoins, Tether (USDT) and USD Coin (USDC), relative to the market cap of all crypto assets.
[adinserter block="1"]The analyst notes when the market cap of the two stablecoins is low compared to the overall market, it indicates the macro top could be near since there are limited new buyers. He highlights the opposite is also true.
“Conversely, whenever the ratio reaches the top of the channel, it indicates that there is a large amount of dry powder on the sideline relative to crypto’s aggregated market cap. As the market rallies, there is a stronger likelihood of market participants becoming induced to chase. The more dry powder the more dry kindle there is for a spark to light on fire. After posting this last month when the ratio reached the top of the channel, it has begun to roll over.”
Looking at Bitcoin, Clemente notes that BTC reached one of the furthest deviations from its 200-day moving average ever last month, suggesting that the leading crypto asset could be in the midst of forming a bear market bottom.
“Bitcoin has only been this far below its 200-day moving average a handful of times (<2%), each of which looked terrifying to buy at the moment, but terrifyingly obvious in hindsight… It has now reverted back, no longer at that level of extreme deviation that has [indicated] market historical bottoms.”
At time of writing, BTC is changing hands for $23,807, up over 35% from its 2022 low of around $17,600.
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