The Founder of crypto analytics firm CryptoQuant, Ki Young Ju, has developed a new market metric which can determine buying pressure, and all indications are that there is tons of buying pressure on the crypto market right now.
This new parameter is called ‘potential buy/sell pressure’, and it is calculated by dividing the amount of Bitcoin (BTC) being held on an exchange by the amount of stablecoins being held on an exchange.
Essentially, crypto traders acquire stablecoins in order to be ready to buy Bitcoin at the exact right time, and therefore more stablecoins being held on an exchange corresponds to more potential Bitcoin buying pressure, since if there’s a glut of stablecoins being held, it means there’s a bunch of traders waiting to buy Bitcoin.
Likewise, if there’s less stablecoins being held, then there’s less potential buying pressure.
Further, if tons of Bitcoin are being held on an exchange, it can be indicative of potential selling pressure.
What this parameter is showing now is that there is far more in stablecoins being held on exchanges, and far less Bitcoin, than the beginning of the year, which suggests that there is strong buying pressure for Bitcoin.
Indeed, global economic headwinds which have caused the stock market to see its worst days since the Coronavirus crash in March also caused Bitcoin to decline from $12,000 to $10,000. However, Bitcoin has been putting up a strong defense at the $10,000 support level despite multiple surges of selling pressure which caused Bitcoin to dip slightly below that level.
Notably, as of this writing the stock market is getting hammered, which would suggest that Bitcoin would go down too, but Bitcoin is holding just above $10,000.
Essentially, the strong buying pressure on the Bitcoin market is apparent, and Bitcoin may ultimately hold the $10,000 level despite the global economy experiencing a serious shock.
Bringing all of this together, it seems this new market metric is accurately capturing buying pressure on the Bitcoin market, and clearly this is a helpful tool that crypto traders can use to assess the strength/weakness of the Bitcoin and crypto market.