USDT dominance chart is rare to come by because nearly everyone is fixated on BTC dominance. But this chart gives a rare insight showing the condition of the market.TradingView recently released a USDT.D chart. It is quite revealing and we are analyzing it with respect to the current bull cycle.
Rarely do we come across USDT dominance in the coin market since every attention is focused on Bitcoin. Considering the stabilizing role that USDT plays in the coin market, its dominance can give a rare insight into the condition of the market, especially during trend reversals.
Bitcoin dominance gives us insight into the preferences of investors when the choice before them is between BTC and thousands of altcoins. But USDT dominance gives us insight into the health of the coin market. That is, if people are buying coins or selling them. As expected, people would convert their digital currencies such as BTC and altcoin to USDT when the confidence in the market is low, but the reverse would be applicable when they’re buying BTC and altcoins because the market sentiment is high.
USDT Dominance Relationship To The Coin Market
In essence, what the dominance of USDT indicates when it goes up is that people are selling their coins, so prices of the digital assets such as Bitcoin and altcoins go fall due to low demand at such periods.
When people start spending their USDT, its dominance reduces and the demand for cryptocurrencies goes right up since this is what they’re buying with USDT.
So if USDT dominance goes up, prices of cryptocurrencies fall, but if its dominance falls, the prices of cryptocurrencies rise.
The Recent Bull Cycle
The pattern formed by the USDT.D chart is clearly a horizontal channel since the beginning of this bull-cycle. It can be observed that whenever USDT.D reaches the resistance area (red ellipse), that the market has bottomed or reached close to its bottom. On the other hand, whenever the USDT.D gets to the support (green ellipse), the top of the market or very close to its top is reached.
We can also see from the RSI on the second chart that the USDT,D is mostly in the overbought region. This signals that the market is poised for a bullish move.
This is especially considering that there have been consecutive days of the asset in the overbought region. The implication is that a bullish reaction to the market would see a further decline in the USDT dominance and the result would be a further bullish crypto market. Nevertheless, with the Market showing moderation, the investor should expect further corrections down the line.
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