Binance's Buying Power Hits 2024 Lows as Stablecoin Reserves Decline

The cryptocurrency market is facing a period of reduced buying power and declining stablecoin reserves on Binance, one of the largest exchanges globally. The exchange's 90-day Buying Power Ratio has fallen to -0.086, its lowest level in over a year. This ratio compares stablecoin reserves to Bitcoin outflows, and a low reading suggests that investors are holding onto their assets rather than using them for buying.

The last time the ratio reached similar levels was in July and August 2024, when Bitcoin was trading between $54,000 and $68,000. Within months, BTC climbed to $102,000 by December. The current market conditions have some similarities to this past cycle, with reduced liquidity potentially preceding a major upward move.

However, the short-term outlook is more cautious, as intense selling pressure has led to a sharp decline in the 7-day Buying Power Ratio. This ratio has rebounded somewhat towards neutral territory in recent days, suggesting that the acute wave of selling may be cooling. Nevertheless, liquidity remains tight on Binance, with stablecoin reserves falling by nearly $10 billion since mid-November.