- Evaluate the relationship between USDT's superiority and virtual currency prices.
- For USDT flows, we see that the outcomes for buyers and sellers are almost equal.
USDT's dominance reveals a lot about the market mood. This is primarily because USDT is the largest stablecoin, so its activity and on-chain flows may reflect the state of market liquidity.
USDT's dominance should technically be inversely related to Bitcoin [BTC] And altcoins. In other words, if there is an outflow of cryptocurrencies, the dominant should be higher.
For example, while September was mostly a bullish period for cryptocurrencies, USDT.D experienced a significant retracement.
The pattern of USDT dominance can also give you a rough idea of how the market will behave. USDT.D fell below three-month support on September 19th.
It has also made new highs, indicating a decline in momentum.
Source: TradingView
Although this month started with signs of regaining momentum, USDT's dominance has waned slightly in recent days. It is hovering just above the 50% RSI level, indicating that the market is in an area of indecision.
A break below 50% of the RSI level is considered a confirmation of further decline. In other words, liquidity will flow in favor of Bitcoin and altcoins.
On the other hand, there is also the possibility of a recovery from current levels, in which case cryptocurrencies will continue to bleed. This ultimately depends on market sentiment.
What the USDT Advantage and Flow Reveals
USDT address activity decreased significantly from October 3rd to 6th.
However, it has since recovered, with the number of active addresses increasing from 16,360 addresses to more than 18,400 over the past three days.
Source: Into the Block
Addresses with zero balances increased from 19,860 addresses on October 6th to 22,530 addresses on October 9th.
This suggests that a significant number of addresses moved their liquidity from USDT to altcoins, which is also consistent with the decline in USDT dominance over the same period.
Despite the above observations, the large-scale holder flows revealed some deadlock in terms of directionality of influence.
Large holders and whales typically have the greatest influence on liquidity flows and therefore the direction of the market.
Source: Into the Block
USDT large holder flows have been roughly evenly matched over the past 24 hours. The inflow of large holders peaked at 2.82 billion USDT, and the outflow of large holders peaked at 2.83 billion USDT.
Based on the above findings, we can conclude that there was some uncertainty as to where the market would lean. In other words, it was consistent with the prevailing neutral sentiment in the market.
