Stablecoin Exchange Reserves Highlighted Rising Buying Power in the Market

Bitcoin’s Dominance Chart Suggested the Market Could Favor BTC in the Coming Weeks

Tether (USDT) and USD Coin (USDC) are the largest stablecoins by market capitalization, their combined dominance standing at 7.19% at press time. The dominance trends of Bitcoin (BTC) or stablecoins can provide insights into market sentiment and potential price movements.

Stablecoin and Bitcoin Dominance Metrics Show Altcoins Could Be Set to Suffer

The combined dominance of Tether and USD Coin has been moving within a descending channel on the 1-week chart. This trend suggests that higher stablecoin dominance indicates investors’ preference for keeping stables rather than investing in altcoins or Bitcoin.

A decrease in USDT and USDC dominance implies that investors are moving their capital into other assets, leading to higher prices and a bullish market sentiment. The chart indicates the dominance could soon fall, which may benefit Bitcoin and potentially many altcoins.

Typically, rising exchange reserves for a crypto asset suggest increased selling pressure. However, an increase in USDT reserves on centralized exchanges signals heightened buying power. This trend has been on the rise for the past 18 months, with significant growth noted in November 2024. Meanwhile, USD Coin’s exchange reserve growth has been less consistent, currently sitting at $4.2 billion compared to USDT’s $42.1 billion, reinforcing USDT’s position as the preferred stablecoin for trading.

The weekly BTC.D chart draws parallels between November-December 2024 and May 2019, with the 60% level acting as resistance. A possible move to the 72% level is anticipated. Like stablecoin dominance, BTC.D is inversely correlated to altcoin performance. An uptick in BTC.D indicates Bitcoin is outpacing the altcoin market.

Although strong BTC growth may lead to capital rotations favoring altcoins, current price trends have dampened hopes of an imminent altseason, leaving market participants uncertain about future movements.