Key Points
- Bitcoin’s market has seen a surge in liquidity, with Tether’s dominance declining, indicating a shift of capital into Bitcoin.
- USDT and USDC represent nearly 50% of total transaction volume in major cryptocurrencies, reinforcing their safe haven status.
BTC’s market has seen a significant influx of liquidity over the past week. This follows BTC breaking through key psychological levels. A major driver of this liquidity has been the declining dominance of Tether (USDT), suggesting that capital may be moving away from stablecoins into Bitcoin.
This trend was confirmed by a bearish MACD crossover on the same day. In simple terms, a significant amount of liquidity has flowed into BTC as investors viewed $62k as a new low and bought the dip.
The Impact of USDT and USDC
Another historic milestone has highlighted the growing significance of USDT and USDC. This has further deepened their impact on BTC’s price action. Currently, USDT and USDC make up almost 50% of the total transaction volume in major crypto assets. This simply reinforces their status as safe havens when Bitcoin nears a market top.
At the time of writing, USDT seemed to be nearing a key support level – One which it has tested twice since July. Each time, Bitcoin faced strong resistance around $65k, resulting in significant pullbacks. With BTC trading at $68,346, a hike in USDT dominance could trigger a correction. This would indicate market panic as sellers take profits before the rally wanes.
USDT Dominance and BTC’s Future
Several key indicators, including a falling RSI, suggested that USDT dominance may continue to decline, possibly revisiting early July levels when BTC was around $68k. If this trend persists, Bitcoin could enjoy a bullish weekend, fueled by strong sentiment as high liquidity flows into BTC from USDT.
However, caution is warranted. While USDT outflows have been gaining momentum, they could trigger a short-term correction. Still, this doesn’t guarantee an outright pullback unless this behavior continues for the next few days. Therefore, closely monitoring the USDT dominance chart is essential. A slight divergence from the prevailing downtrend might signal the end of this bullish cycle. If history is any guide, it could push BTC back below $62k – The established local low.