USDT.D Reached Resistance Level, Potential Market Rebound?

Source: TokocryptoBlog Original Title: USDT.D Reached Resistance Level, Potential Market Rebound? Original Link:

Understanding Cash Flow and USDT Dominance

Understanding the money flow (money flow) is the key to predicting the next trends in the crypto market, one of which is by reading USDT.D or the dominance of USDT in the overall crypto market.

Currently, the main focus is on USDT Dominance (USDT.D) which appears to be testing its critical resistance level.

Historically, the dominance of this stablecoin has an inverse correlation with Bitcoin and Altcoins; when USDT dominance peaks and holds, it often signals that liquidity is ready to flow back into riskier assets.

Will the rejection at this resistance area trigger the anticipated market rebound that investors have been waiting for? Let's take a closer look!

What is USDT.D?

USDT.D, or USDT dominance, is a metric that measures Tether's market share (USDT) against the total capitalization of stablecoins or the cryptocurrency market as a whole.

This dominance is often used as a sentiment indicator, where an increase in total dominance may indicate investors shifting to safer assets such as stablecoins ( investors swapping Bitcoin/Altcoin for USDT ), and a decrease can be a signal for funds flowing into riskier assets compared to stablecoins, such as Bitcoin and altcoins ( investors swapping USDT for Bitcoin/Altcoin ).

Correlation of USDT.D with Bitcoin and Altcoin Movements

Historically, market data shows a very strong and consistent inverse correlation (inverse correlation) between USDT Dominance (USDT.D) and the price movements of Bitcoin and Altcoins.

If we dissect the chart above, this correlation can be explained through a simple liquidity flow mechanism where USDT.D can be used as a “Risk-Off” indicator.

This means that when the USDT.D chart shows an upward trend ( as indicated by the blue arrow pointing upwards on the top chart ), it signals that investors are liquidating ( selling ) their cryptocurrencies into stablecoin (Tether).

This usually happens when the market is fearful (fear) or is taking profit (profit taking). As a result, liquidity exits Bitcoin, causing the price of BTC to experience a correction or decline (as seen in the bottom chart).

The correlation of USDT.D is simply as follows:

• USDT.D rises → BTC and altcoins usually fall.
• USDT.D down → BTC and altcoins usually rise.

In addition to using USDT.D, you can also try adding USDT.D with USDC.D to see a clearer stablecoin dominance. You will find a pattern that is also quite similar, where there is the best correlation between the dominance of USDT + USDC and BTC, as shown in the image below:

Current Resistance Level Analysis

Based on the observation of the weekly time frame (1W), USDT Dominance (USDT.D) is currently testing a significant resistance area.

The resistance range is between 6.20% and 6.740%. Historically, in the last few years, every time USDT dominance attempted to break through this area in the past year, there has always been a strong (rejection).

Currently, the USDT.D position is at 6.184%, which means it is in the resistance level zone. If the USDT.D dominance fails to break through (breakout), there is a high likelihood of a downward rebound which could indicate a decrease in the total USDT in the market and the potential rise of BTC and altcoins.

In terms of momentum, the RSI Relative Strength Index (RSI) at the bottom of the chart indicates an upward trend (uptrend), which previously slightly reached the overbought level (overbought) above level 70, before eventually coming back down.

If the RSI starts to turn down when the price touches resistance, this could be a confirmation of a bearish signal for USDT.D, which means a bullish signal for Bitcoin and Altcoins.

However, if USDT.D successfully breaks through the resistance, it is not impossible for USDT.D to visit the 8% level or continue to rise towards the highest level in the 2022 bear market, which is at 9.3%.

Although the technical analysis of USDT Dominance above provides a logical picture of the potential market direction, it is important to understand that this review is merely an interpretation based on historical data probabilities and not a definitive determinant of future price movements.