USDT Dominance: an indicator to forecast Bitcoin’s direction

Dec 27, 2023

USD Tether, or USDT, came into existence as a digital version of the U.S. dollar, and it succeeded. USDT is pegged to the U.S. dollar and is the top and most used stable coin in the crypto market. USDT is also being used for transferring money or other means of payment, although mostly in the crypto market. Many others tried to capture a piece of this huge market: USDC, BUSD, DAI, TUSD, and UST. We all know what happened to the last one, UST (Terra USD) depegged from the U.S. dollar and crashed.

Anyway, since USDT is the most used stable coin in the crypto market, its dominance can reveal important info about the crypto market, and mostly about the Bitcoin.

So, let's start with the plain USDT Dominance chart; it shows the percentage of the total crypto markets in the form of USD Tether. As can be seen, the USDT Dominance chart shows two ascending channels. The first is steeper than the second, and the reason for that is Tether's totalitarian nature, as back then there were no other worthy competitors, and most notably its quick acceptance by the crypto community—the traders.

Now, the second ascending channel is closer to the norm and, as such, can be used as a revealing indicator. It's easy, 1) when USDT Dominance goes down, that means most people are buying Tether, so there is a shortage of Tether in the market. 2) When USDT Dominance goes up, that means most people are selling Tether, so there is a surplus of Tether in the market. So what do these mean?

When people are buying more Tether than before, USDT Dominance decreases, and that means they are converting their fiat money, such as U.S. dollars, Euro, British Pound, Franc, etc., to Tether in order to buy crypto assets such as Bitcoin. Now, here is the important part: If more people are converting their fiat money into Tether to buy crypto coins, the demand for crypto assets will go up, and when demand goes up, so does the price.

When people are selling their crypto assets more than before, they are converting their crypto assets, such as Bitcoin, into Tether, so there is a surplus of Tether in the market, and as a result, the USDT Dominance increases. This happens when traders/people want to save profits or think the market could go into a downtrend/correction, so they sell their crypto assets and prefer to hold a stable coin like Tether.



Here, the USDT Dominance chart is compared with the Bitcoin price chart. As can be seen, when USDT Dominance went down, the Bitcoin price went up, and vice versa. So, when the Bitcoin price was decreasing, more people were selling Bitcoin and converting their crypto assets into Tether; thus, more Tether became available in the market, and as a result, the USDT Dominance went up.

The USDT Dominance chart can be used as a simple indicator to forecast Bitcoin's possible future movements.

Dec 27, 2023

Note

Now, let's go back to the USDT Dominance chart. Tether has been moving in an ascending channel for a long time. Currently, Tether is at the bottom of this channel; so, if Tether were to respect this channel's bottom line, Tether has to go up, and that means Bitcoin going down. In other words, if Bitcoin were to continue its upward wave, Tether would have to break this long-lasting ascending channel downward. Let's see what happens.

Jan 3

Note

So, as expected, USDT Dominance couldn't break the ascending channel downward, and it seems going up. As a result, Bitcoin making correction. There are three resistance areas ahead that USDT Dominance could bounce off and enter a downtrend again; the last two areas are the ones with higher probability of occurrence. Let's see what happens.

Feb 16

Note

So, following from the previous analysis, USDT Dominance followed the path from the first yellow arrow and went up and touched the first horizontal resistance area. After that, USDT Dominance came down and then broke the ascending channel downward; as a result, Bitcoin went up strongly. This event will result in a milestone for the Bitcoin. Let's see what happens.

Mar 11

Note

So, USDT Dominance came down and Bitcoin went up; exactly according to analysis. Now, USDT Dominance approaching the first horizontal resistance area. Could this area be the one that USDT Dominance bounce off, goes up, and Bitcoin goes down. Let's see what happens.

Mar 15

Note

So, USDT Dominance reached the horizontal resistance area and reacted to it. As a result, USDT Dominance went up and Bitcoin came down.

Mar 20

Note

So, USDT Dominance went up and have reached the first resistance area. Have to wait and see if USDT Dominance break this area upward and goes up toward the next one; or this area holds the line. Let's see what happens.

Mar 27

Note

So, USDT Dominance couldn't break the first resistance area, and came down to gain momentum. Most probably, USDT Dominance will attack this area again and pass through it; as a result, Bitcoin correction will continue too. Let's see what happens.

Apr 12

Note

It seems like a triangle pattern. Bitcoin's pattern is similar too. Have to wait and see when and how these triangular patterns break.

May 6

Note

So, even though it seems Bitcoin is posed for upward move, USDT Dominance tells another story. USDT Dominance is moving in a minor ascending channel and probably goes up one more time to touch either the channel's upper line or the horizontal resistance area, then comes down. Overall, USDT Dominance has to first break this channel downward for the first signal of Bitcoin's upward continuation. Let's see what happens.

May 22

Note

So, USDT Dominance didn't go up much but instead came down, breaking the ascending channel downward, and as a result, Bitcoin went up too. It seems USDT Dominance is posed to go down toward the major horizontal resistance area, which couldn't break previously. Let's see what happens.

May 22

Note

In a much broader view, it seems USDT Dominance is moving down in a descending-inverted wedge pattern. So, if true, major downward move is expected for USDT Dominance; and vice versa for Bitcoin. Let's see what happens.

Jun 21

Note

So, USDT Dominance broke the descending-inverted wedge upward and went up. As a result, Bitcoin is going down. It seems USDT Dominance is making a triangle pattern, which is in correspondence with Bircoin's correction pattern.

Jul 1

Note

So, USDT Dominance reached the triangle upper line, made a reversal and went down. As a result, Bitcoin is going up. Let's see if USDT Dominance breaks this triangle downward or not.

Jul 15

Note

So, as it turned out, USDT Dominance is moving in an upward channel; reached the channel's upper line and then started a downward move. As a result, Bitcoin went up. If Bitcoin's upward trend is to continue, USDT Dominance has to break the channel's lower line. Let's see what happens.

Jul 29

Note

So, right on the spot; as USDT Dominance reaches the bottom of the channel, Bitcoin reaches the minor horizontal area too. It seems there is one minor upward left for USDT Dominance to unfold, then come down and break the channel downward. On the other side, Bitcoin does the opposite. Let's see what happens.

Jul 30

Note

Here is the overview of the USDT Dominance wave count, indicating that the last major Bitcoin upward wave is yet to come. Let's see what happens.

Sep 15

Note

So, it seems USDT Dominance made the last minor correction wave, making a complex zigzag correction pattern. Right now, USDT Dominance is trying to break the minor trend line. If successful, that is the first signal for Bitcoin upward wave. The final signal is when USDT Dominance break the correction pattern bottom line. Let's see what happens.

Oct 1

Note

So, USDT Dominance broke the minor trend line and went down. When USDT Dominance breaks the ascending channel's bottom line, that means Bitcoin's next upward phase has already started. And with a little lag, so does the altcoins' next upward phase. Let's see what happens.

Oct 16

Note

So, USDT Dominance reached the ascending channel's bottom line. The only move left is to break the channel downward. Let's see what happens.

Nov 22

Trade active

So, USDT Dominance broke the ascending channel's bottom line, made a pullback, and is going down toward the first major horizontal area. At this area, USDT Dominance will probably make a come back, as a result Bitcoin will make a correction. Let's see what happens.

Dec 10

Note

So, USDT Dominance is making a correction right on the first major horizontal area. Let's see what happens.