Stablecoin

Rally

Sharp

Bitcoin

<p>Over the past cycle, periods of strong stablecoin growth have consistently aligned with constructive market phases. Rising stablecoin market caps usually reflect fresh liquidity waiting to be deployed, acting as dry powder for risk assets like Bitcoin.</p> 
<div class="light-yellow-block">
 <strong>Key Takeaways</strong> 
 <ul> 
  <li><strong>The Stablecoin Supply Ratio just recorded its sharpest drop of the current cycle, signaling potential Bitcoin undervaluation</strong></li> 
  <li><strong>Large stablecoin liquidity remains available, creating conditions that have historically aligned with market bottoms</strong></li> 
  <li><strong>A rising SSR and stable stablecoin market caps are needed to confirm that capital is re-entering the market&nbsp;</strong></li> 
 </ul> 
</div> 
<p>What matters most, however, is not just the size of that liquidity pool, but when and how it is used.</p> 
<h2 id="why-the-stablecoin-supply-ratio-matters">Why the Stablecoin Supply Ratio Matters</h2> 
<p>This is where the Stablecoin Supply Ratio (SSR) becomes critical. The metric compares Bitcoin’s total market capitalization to the combined value of major stablecoins. In simple terms, it shows whether Bitcoin is becoming expensive relative to available purchasing power.</p> 
<p>When the SSR spikes higher, it often signals that Bitcoin’s market cap is expanding faster than stablecoin <a class="wpg-linkify wpg-tooltip" title="<h3 class=&quot;wpg-tooltip-title&quot; id="span-class-wpg-tooltip-term-title-liquidity-span"><span class=&quot;wpg-tooltip-term-title&quot;>Liquidity</span></h3><div class=&quot;wpg-tooltip-content&quot;><p>The ability to quickly convert a digital currency or token into another asset or cash without affecting its price.</p></div>">liquidity</a>. Historically, this has coincided with overheated conditions or weakening momentum. On the flip side, sharp declines in the SSR indicate that stablecoin liquidity is growing faster than Bitcoin’s valuation, suggesting potential undervaluation.</p> 
<p><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-164701" src="https://coindoo.com/wp-content/uploads/2026/01/G_BQbD8WgAAaB-2.jpeg" alt="" width="2048" height="1152" srcset="https://coindoo.com/wp-content/uploads/2026/01/G_BQbD8WgAAaB-2.jpeg 2048w, https://coindoo.com/wp-content/uploads/2026/01/G_BQbD8WgAAaB-2-300x169.jpeg 300w, https://coindoo.com/wp-content/uploads/2026/01/G_BQbD8WgAAaB-2-711x400.jpeg 711w, https://coindoo.com/wp-content/uploads/2026/01/G_BQbD8WgAAaB-2-768x432.jpeg 768w, https://coindoo.com/wp-content/uploads/2026/01/G_BQbD8WgAAaB-2-1536x864.jpeg 1536w, https://coindoo.com/wp-content/uploads/2026/01/G_BQbD8WgAAaB-2-915x515.jpeg 915w" sizes="auto, (max-width: 2048px) 100vw, 2048px"></p> 
<p>The latest data shows one of the most aggressive SSR drops of the entire cycle following Bitcoin’s recent correction.</p> 
<h2 id="a-liquidity-imbalance-emerges-after-the-pullback">A Liquidity Imbalance Emerges After the Pullback</h2> 
<p>The recent move lower in Bitcoin triggered a sharp contraction in its market cap, while stablecoin supply remained comparatively resilient. This created a noticeable imbalance: a large pool of stablecoin liquidity sitting against a cheaper Bitcoin valuation.</p> 
<p>Historically, similar conditions have often marked areas where market bottoms begin to form, as excess liquidity eventually starts flowing back into BTC. From a structural perspective, this setup has tended to favor recovery phases rather than prolonged downside.</p>  
<div class="read-more pb-3 pt-3 pt-md-2 px-3 my-4 border bg-light"> 
 <h5 class="text-uppercase border-bottom mb-3 pb-1 d-none d-md-block">READ MORE:</h5> <a class="article row text-decoration-none" href="https://coindoo.com/silvers-historic-rally-might-only-be-getting-started-heres-why/" title="Silver’s Historic Rally Might Only Be Getting Started – Here’s Why"> 
  <div class="contentRight col-4"> <span class="imgContainer mt-0"> <img decoding="async" class="image img-defer" src="https://coindoo.com/wp-content/uploads/2026/01/silver-bars-coins-3992.jpg"> </span> 
  </div> 
  <div class="contentLeft col-8"> 
   <h4 class="title mb-0">Silver’s Historic Rally Might Only Be Getting Started – Here’s Why</h4> 
  </div> </a> 
</div> 
<p>However, one condition still needs to be met.</p> 
<h2 id="what-needs-to-happen-next">What Needs to Happen Next</h2> 
<p>For this signal to fully play out, the SSR needs to begin climbing again. That would indicate stablecoins are no longer idle and are actively being deployed into Bitcoin and the broader crypto market.</p> 
<p>At the same time, stablecoin market caps must remain stable or continue rising. A decline in stablecoin supply would weaken the bullish interpretation, suggesting liquidity is leaving the system instead of preparing for redeployment.</p> 
<p>Macro uncertainty remains a key risk. Ongoing geopolitical tensions and trade-related stress add another layer of unpredictability, meaning these on-chain signals should be monitored closely rather than taken in isolation.</p>  
<p style="text-align: center;"><em><strong>The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or <a class="wpg-linkify wpg-tooltip tooltipstered">cryptocurrency</a>. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.</strong></em></p>
<p>The post <a href="https://coindoo.com/bitcoin-liquidity-signal-flashes-potential-bottom-after-sharp-correction/">Bitcoin Liquidity Signal Flashes Potential Bottom After Sharp Correction</a> appeared first on <a href="https://coindoo.com">Coindoo</a>.</p>

Bitcoin Liquidity Signal Flashes Potential Bottom After Sharp Correction

Table of Contents

Coindoo.com

Other articles published on Jan 19, 2026

uDegen: The Next Utility Layer of the Utopia Ecosystem

Cardone Capital Ramps Up BTC Plan With $10M Add, Saylor Watching

Ethereum hits new 2.8M daily transaction record as retail returns for low fees

Spur Protocol Daily Quiz Answer 20 January 2026: Earn Rewards

Ethereum Prices Hover as Key Resistance Looms

Federal Reserve Chair Nomination Stakes: Warsh Surges Ahead

Join our free newsletter for daily crypto updates!