Crypto’s ‘Dry Powder’ Indicator Just Turned – Here’s What’s Next, According to Will Clemente

Crypto’s ‘Dry Powder’ Indicator Just Turned – Here’s What’s Next, According to Will Clemente

There is a lot of dry powder in the crypto market just as Bitcoin (BTC) shows a historical bottom indicator, according to popular chain analyst Will Clemente.

In a new installment of the Blockware Intelligence newsletter analysis, Clemente tracks the combined market cap of the two largest stablecoins, Tether (USDT) and USD Coin (USDC), against the market cap of all crypto assets.

The analyst notes that when the market capitalization of the two stablecoins is low compared to the overall market, it indicates that the macro top may be near as new buyers are limited. He emphasizes that the opposite is also true.

“Conversely, when the ratio reaches the top of the channel, it indicates that there is a large amount of dry powder on the sidelines in relation to the crypto’s aggregate market value. As the market increases, market participants are more likely to be transferred to chase. The more dry powder, the more dry kindling there is for a spark to light. After posting this last month when the relationship reached the top of the channel, it has started to roll over.”

Source: Blockware Intelligence/Will Clemente

Looking at Bitcoin, Clemente notes that BTC reached one of the furthest deviations from its 200-day moving average ever last month, suggesting that the leading crypto-asset may be in the midst of forming a bear market bottom.

“Bitcoin has only been this far below its 200-day moving average a handful of times (<2%), each of which looked terrifying to buy in the moment but terrifyingly clear in hindsight… It has now reversed, no longer at that level of extreme deviance that has [indicated] historical market bottoms."

Source: Blockware Intelligence/Will Clemente

At the time of writing, BTC is trading hands at $23,807, up over 35% from its 2022 low of around $17,600.

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