Tether Dominance Surges to 2-Month High, Bear Market Ahead?

Tether Dominance (USDT.D) is one of the metrics closely correlated with Bitcoin’s price and overall market capitalization. Yet it is often overlooked in many market analyses. Now, this data has confirmed warning signals worth paying attention to.

USDT.D represents Tether’s share of the total crypto market capitalization. Changes in USDT.D can help measure how actively traders spend USDT, providing a basis for predicting possible scenarios.

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Analysts Warn as Tether Dominance (USDT.D) Reaches 2-Month High

Tether (USDT) remains the leading stablecoin in terms of both market share and liquidity. A decline in USDT.D usually means traders spend more USDT to buy Bitcoin and altcoins, driving higher prices.

On the other hand, a rise in USDT.D indicates that traders are selling assets and moving back into USDT. This reflects cautious sentiment toward volatility and often signals potential downside risk.

TradingView data shows that the inverse correlation between USDT.D and total crypto market capitalization has been observed repeatedly over the years.

During the final week of September, USDT.D climbed to 4.69%, its highest level in two months. Analysts see this breakout as a move that could push it even higher, raising concerns about a prolonged bearish outlook in the days ahead.

Market analyst Jason Pizzino remains hopeful that USDT.D will soon correct. However, he does not rule out a breakout above 5% as a troubling confirmation.

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“Here’s the breakout no crypto bull wants to see. The good news is that USDT dominance is now testing the macro 50% level. However, above ~5% and the trend could be changing for the bulls. Hopefully, it’s a test and rejection. Otherwise, be prepared,” Pizzino commented.

Technical vs. Fundamental Considerations

At this stage, most negative analyses based on USDT.D rely heavily on technical signals, where trendlines and resistance levels play a central role. This limits reliability when broader fundamental factors are added to the picture.

Those fundamental factors include record-high USDT reserves on exchanges, new peaks in USDT netflows, and rising demand from traders reflected in Tether’s recent surge in USDT minting. This setup acts like gunpowder ready to be deployed.

“Now, given the perfect negative correlation between USDT.D and $TOTAL, this would imply ‘one more sweep of the lows’… But TA isn’t always perfect. It doesn’t make much sense to unload bags here just to maybe buy them back slightly lower. We are likely close to finalizing our high time-frame swing low for a bullish Q4,” Max, founder of BecauseBitcoin, said.

The late-September market decline has intensified doubts. Debate continues over whether this is a bear trap or the start of a broader downtrend. As a result, every new signal is being closely examined.

USDT.D is part of those signals. It should not be viewed in isolation but rather in combination with other indicators to minimize risk as much as possible.