USDT.D has reached a key resistance level, is a market rebound imminent?

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

Understanding the Key to Capital Flow

Understanding money flow is key to predicting the next trend in the cryptocurrency market, one method of which is to read USDT.D or the dominance of USDT in the entire cryptocurrency market.

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

Historically, the dominance of this stablecoin is inversely related to Bitcoin and altcoins; when the dominance of USDT peaks and is suppressed, it usually indicates that liquidity is ready to flow back into risk assets.

Will the rejection of this resistance zone become the long-awaited trigger for a market rebound that investors have been looking forward to? Let's take a closer look!

What is USDT.D?

USDT.D or the dominance of USDT is an indicator that measures Tether's (USDT) market share relative to the total market capitalization of stablecoins or the overall cryptocurrency market.

This dominance is often used as an emotional indicator, where an increase in total dominance may indicate that investors are turning to safer assets, such as stablecoins (investors exchanging Bitcoin/altcoins for USDT), while a decrease may indicate funds flowing into riskier assets than stablecoins, such as Bitcoin and altcoins (investors exchanging USDT for Bitcoin/altcoins).

Correlation of USDT.D with Bitcoin and Altcoin Movements

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

If we analyze the chart above, this correlation can be explained by a simple liquidity flow mechanism, where USDT.D can be used as a “risk aversion” indicator.

This means that when the USDT.D chart shows an upward trend (as indicated by the blue arrow in the upper part of the chart), it suggests that investors are liquidating (selling) their crypto assets and converting them into stablecoins (Tether).

This usually happens when the market feels fear or is taking profits. As a result, liquidity flows out of Bitcoin, leading to a correction or decline in the BTC price (as shown in the lower part of the chart).

In simple terms, the correlation of USDT.D is as follows:

• USDT.D rises → BTC and altcoins usually drop
• USDT.D drops → BTC and altcoins usually rise

In addition to using USDT.D, you can also try adding USDC.D to get a clearer view of the dominance of stablecoins. This way, you will find similar patterns, where the dominance of USDT + USDC has the best correlation with BTC, as shown in the figure below:

Current Resistance Level Analysis

According to the observation of the weekly (1W) time frame chart, the dominance of USDT (USDT.D) is currently testing a quite important resistance area.

The resistance area ranges from 6.20% to 6.740%. Historically, in the past few years, every time USDT's dominance attempted to break through this area over the past year, it has always faced strong rejection.

Currently, the position of USDT.D is at 6.184%, which means it is in a resistance level area. If the dominance of USDT.D fails to break through, it is likely to rebound downwards, which may indicate a decrease in the total amount of USDT in the market and the potential for an increase in BTC and altcoins.

From the perspective of the Relative Strength Index (RSI) momentum, the lower part of the chart shows an upward trend, having previously slightly reached overbought levels (above 70) before pulling back.

If the RSI starts to turn down when the price reaches resistance, this could confirm a bearish signal for USDT.D, which means a bullish signal for Bitcoin and altcoins.

However, if USDT.D successfully breaks through resistance, it is not impossible for USDT.D to reach the 8% level or continue rising to the peak level of 8% or even 9.3% during the 2022 bear market.

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