Tether Dominance (USDT.D) measures the market capitalization share of Tether (USDT) in the total market capitalization. This data has never been wrong in predicting major market peaks, but today USDT.D has given a rare signal that could confirm a new phase for the market.
Specifically, what is it? Here are the observations and notes from BeInCrypto about this rare signal.
Unprecedented amount of stablecoin being deposited on exchanges
The latest weekly report from glassnode shows that the amount of stablecoin on exchanges when Bitcoin surpassed $90,000 has increased by more than $9.7 billion. This is the largest increase in stablecoin on exchanges to date, surpassing even the period when Bitcoin hit a new high above $65,000 in 2021.
Changes in the amount of Stablecoin on exchanges. Source: glassnode.Meanwhile, the market capitalization of Tether alone increased by $10 billion in October, from $120 billion to over $130 billion. Glassnode noted that most of the newly minted USDT has been transferred to exchanges. This amount of money becomes potential buying power, and potential bottom-fishing power if the market turns negative.
"The increase in stablecoin balances on trading platforms reflects strong speculative demand, as investors position themselves to capitalize on trends, further reinforcing the bullish narrative and momentum post-election." - glassnode commented.
In addition to the record-high transfer of stablecoin to exchanges, the Tether Dominance (USDT.D) has dropped to a low level, which is an interesting and rare signal in the history of market volatility.
USDT.D predicts the market may be about to enter a new FOMO phase
USDT.D and market capitalization are two inversely correlated variables. The rising trendline of USDT.D from 2018 to the present has accurately predicted the peaks of the market capitalization many times. But recently, USDT.D has broken this trendline, making the signal no longer effective.
"USDT.D and cryptocurrencies have an inverse correlation. The trendline has marked the peak of the entire cryptocurrency market in the past 4 years. But now the trendline and the moving average have given a signal...trade what you have, not what you fear might happen." - investor Mercury commented.
Fluctuations of Tether Dominance (USDT.D) and market capitalization. Source: TradingView.This means that USDT.D may enter a downtrend and the market capitalization may continue to reach new highs. Combined with the large transfer of stablecoin to exchanges as mentioned above, this signal may be predicting that the market has just entered a new psychological phase.
The market capitalization includes the capitalization of Altcoins, so the USDT.D signal is also important for the Altcoin Season. Recent analysis from BeInCrypto shows that the volume of Altcoins has also shown signs of strong recovery, with the emergence of a new class of investors.
"We need BTC.D to peak AND USDT.D to break this trendline for a true Altcoin Season to occur." - Justin Bennett commented.
Technically, USDT.D could continue to drop to the recent low of 3.8%, at which point Bitcoin could break or touch $100,000. If USDT.D continues to decline, the stablecoin on exchanges will continue to be spent to buy Altcoins, and the market capitalization will remain above $3.3 trillion.
"USDT.D has finally broken out, $105,000 is an easy target for Bitcoin" - trader Ezekiel predicted.
Also Read: Why do small investors get excited as Bitcoin (BTC) price rises higher?
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