Predictive Strength
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Predictive Strength
Measures the ratio of stablecoin supply to Bitcoin market capitalization.
SSR acts as a real-time gauge of stablecoins' "dry powder" relative to Bitcoin's market size. When SSR falls (stablecoin supply rises faster than BTC's market cap), it signals latent buying power that historically precedes upward BTC price movements. For example, the SSR's drop to -2.27 in September 2024 preceded Bitcoin's rally to $64K by Q1 2025. This liquidity-driven relationship bypasses speculative noise, focusing on capital actually positioned to enter markets.
New stablecoin issuance (e.g., USDT's $15B expansion since October 2023) often precedes BTC accumulation phases. Institutions and whales mint stablecoins to park fiat equivalents before deploying into risk assets. The 10.9% stablecoin supply growth in early 2025 – reversing a 2024 contraction – aligned with Bitcoin's breakout above $70K.
The Stablecoin Supply Ratio (SSR) is calculated by dividing Bitcoin's market capitalization by the aggregate market cap of all stablecoins, using real-time data from exchanges and on-chain metrics. This raw ratio is then normalized against historical averages through statistical methods.
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To understand a predictive factors predictive power, we create a simple long/short strategy and simulate its past performance (with daily rebalancing):
The strategy is rebalanced daily, on a continuous basis. There are 0.5% transaction costs applied on each position adjustment.
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