The Binance Reserve Ratio Drops to a New All-Time Low—Here’s Why Bitcoin Could Rally

This Binance stablecoin indicator has just flashed a major buy signal for Bitcoin, even as its price corrects further on Monday.

CryptoQuant data drew the crypto community’s attention to this historically bullish event in a December 1 post. It shows that while users are panicking over the recent Bitcoin price decline, whales with unprecedented stablecoin firepower are preparing to scoop up the premier asset in large numbers.

Notably, Bitcoin continues to struggle to sustain an uptrend. After an optimistic rally to $93,000 last week, the digital asset lost momentum again, dropping 5% today to trade at $85,970 at the time of writing.

Bitcoin-to-Stablecoin Reserve Ratio Smashes 2018 Lows

The analysis, originally from CryptoOnChain, shows that Binance’s reserve ratio has dropped below its 2018 historical low, reaching new all-time lows. This reserve in question is the Bitcoin-to-Stablecoin Reserve Ratio, a metric that compares the total supply of BTC on exchanges to that of stablecoins.

Specifically, it indicates that the supply of Bitcoin to stablecoin on Binance has crashed to 1.088. The analytical exposition identified that such a downtrend could lead to bullish momentum for BTC, as it indicates strong idle buying power.

This suggests that the volume of stablecoins on the largest cryptocurrency exchange in the world by trading volume has hit new all-time highs relative to Bitcoin, surpassing its 6-year-old peak, indicating that whales are “locked and loaded” and could soon start deploying their stablecoins to accumulate Bitcoin.

BTC Always Rallies When This Happens

Meanwhile, CryptoOnChain presented a chart to highlight how bullish this is for Bitcoin. Per the chart, BTC usually rallies whenever the Bitcoin-to-Stablecoin Reserve Ratio on Binance drops to a new low.

For context, the chart shows a drop in early 2020, which preceded BTC’s recovery from around $9,000 to its 2021 peak of $69,000. Another decline in July 2022 and January 2023 catalyzed minimal upticks for the cryptocurrency, while a similar event in March 2023 led it to a break above its 2021 high to unprecedented prices.

Notably, the last occurrence was around April’s low of $74,441. Bitcoin also rallied nearly 70% to its October all-time high of $126,220 before the recent downturn. With stablecoin liquidity on Binance hitting unprecedented levels, Bitcoin could record an impressive bullish reversal to even greater heights.

The analysis comes at a time when the uncertainty around the crypto market swells. Veteran analyst Peter Brandt highlighted in a tweet that Bitcoin could revisit a green zone between $70,000 and mid-$40,000. However, this analysis suggests this may not be the case for the apex cryptocurrency.