A widely followed crypto analyst says one stablecoin metric will likely indicate when Bitcoin (BTC) and other digital assets will enter a downtrend.
In a new video update, crypto strategist Jason Pizzino tells his 351,000 YouTube subscribers that the price of Bitcoin and other crypto assets could be negatively impacted if the USDT dominance (USDT.D) chart does not soon dip below the 3.7% support level.
A bullish USDT dominance, the ratio of USDT’s market cap relative to the rest of the crypto assets, is generally considered bearish for Bitcoin and other cryptocurrencies as it indicates traders are unloading their crypto holdings in favor of the stablecoin.
“So over the coming months, leading into this early quarter three, perhaps, USDT dominance, if it’s still not breaking through the zone of 3.7% to 4.5%, probably a good sign to get a little cautious on your trades and not to get a bit too crazy…
The reason for that is, this is where the money is in crypto. This is like our global money supply for Bitcoin, and if it’s not getting projected out there, if it’s not being released, well, then where is the money coming from? Some might say, well, it’s just ETF (exchange-traded funds) buying. And that goes straight from cold, hard USD into ETFs, into Bitcoin ETFs, perhaps.
This has had such a strong correlation between the two that it would seem unwise to forget about it. And yes, I already hear the argument saying, well, just because it’s correlated doesn’t mean it has to continue on like that. For sure, but while it’s still working, probably a good idea to keep it there.”
At time of writing, USDT.D is hovering at 4.53%.
He also looks at the combined dominance of the Tether-issued stablecoin USDT plus the dominance of USDC, issued by Circle, and says the chart needs to dip below 5% to trigger explosive rallies for BTC, Ethereum (ETH) and other digital assets.
“Now the other one I take a look at is USDT dominance plus USDC dominance, so the two largest stablecoins…
You’re back down here at the double bottom of 5%. So this chart also should be able to break down from the 5% level if we’re going to see some pretty significant gains for Bitcoin, ETH and so on.”
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