Bitcoin Liquidity Setup Signals Potential Rally Ahead

CryptoQuant analyst Moreno has identified the Stablecoin Supply Ratio (SSR) as the first clear indicator of Bitcoin’s current market positioning. The SSR, which compares Bitcoin’s market capitalization to the total market cap of stablecoins, has dropped back into the 13 range. This level has historically aligned with significant market lows, including periods in mid-2021 and several moments throughout 2024.

Historical data reveals that when the SSR fell to similar levels, liquidity quietly built up in the market, typically followed by buying activity after periods of low volatility. At press time, Bitcoin was trading around $104,500, down 0.5% over the past day, having experienced a decline of about 1.8% earlier that pushed the price near $103,400, briefly touching $102,850 during the move.

The second critical metric highlighted by Moreno comes from Binance exchange data, which shows stablecoin balances rising while Bitcoin reserves are simultaneously shrinking. This pattern indicates that more cash-like tokens are sitting on the exchange while fewer coins are being held there, suggesting capital waiting on the sidelines and holders moving coins off exchanges into longer-term storage.

According to the referenced data, this specific configuration has appeared only a handful of times since 2020. Each previous instance marked a pivotal moment for Bitcoin’s trajectory, with the movement typically preceding significant price surges. Moreno noted, ‘We’re witnessing a liquidity configuration that has only appeared a handful of times since 2020, and each instance marked a pivotal moment for Bitcoin’s trajectory.’

The current trading backdrop remains cautious despite these promising technical signals. Many investors had expected a market lift following news that the US Congress approved short-term federal funding through January 30, yet cryptocurrency failed to rally alongside other risk assets. Instead, some capital rotated back to stocks, while large holders took profits after recent highs, causing momentum to cool.

This mixed reaction demonstrates how macroeconomic events can shift capital flows without immediately translating into cryptocurrency buying. The market’s current state shows that while the technical setup appears favorable, external factors and investor sentiment continue to play crucial roles in determining short-term price action.

Moreno warns that the current liquidity zone acts as a final structural support level. If these critical metrics break down decisively, it could signal a deeper market reset before any sustained recovery. In such a scenario, buying would likely be delayed and volatility would increase significantly. While this outcome isn’t guaranteed, it represents a clear risk that traders are monitoring closely.

Based on comprehensive reports and on-chain signals, Moreno believes the risk-to-reward ratio currently favors buyers at these levels. The built-up stablecoin supply and falling exchange BTC reserves provide technical support for this view. Historical patterns suggest that the last three months of the year often bring gains for Bitcoin, though past performance doesn’t guarantee future returns.

The current indicators show capital parked in stablecoins and fewer coins available on major exchanges, creating a setup where fresh buying could push the market higher quickly if sentiment turns positive. However, the opposite scenario remains possible: a break below these critical levels would reshape the market cycle and force many participants to reconsider their positions. Ultimately, market forces will determine which path Bitcoin takes in the coming weeks.