Tether's dominance indicates problems for Bitcoin, warns analyst

According to the trader and analysts Jason Pizzino, market observers may have to adjust to possible head winds in the crypto area.

In a current market analysis, he emphasized an important indicator that could announce a cooling phase for Bitcoin and other digital assets: the dominance of Tether (USDT) in the entire cryptomarkt.

Tether dominance, often referred to as USDT.D, pursues the proportion of stablecoin in the entire market capitalization of cryptocurrencies. When this proportion increases, this usually indicates that capital flows into stable coins from risk systems such as Bitcoin – an indicator of a defensive positioning of the dealers.

With currently around 4.53%, USD.D is well above the critical threshold of 3.7%. According to Pizzino, this could be a sign that investors' interest in more risky systems wanes, provided that this value does not fall again soon.

“If we see no decline in this relationship at the beginning of the third quarter, retailers could move their excessively aggressive strategies back,” he noted. The conclusion is simple: if more money is in stable coins, less flows into assets such as BTC, ETH or old coins.

While some argue that capital that flows directly from Fiat currencies into Bitcoin ETFs could change the dynamics, Pizzino remains careful. He emphasized that the correlation between the dominance of Tether and the price development of cryptocurrencies was strong in the past – and as long as this relationship does not change, it should not be ignored.

The coming weeks will be crucial for whether this pattern continues or whether institutional inflows about ETFs begin to break the development.