Timing the Market Using Tether Dominance
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I always emphasize that time in the market beats timing the market, but I want to share an interesting approach that you can consider taking when timing the cryptocurrency market, especially when it comes to Bitcoin's overall direction.
This is not financial advice. This is for educational purposes only.
Tether Dominance
- Just as Bitcoin dominance refers to Bitcoin's market cap relative to that of the entire market cap, Tether dominance is no different.
- It refers to how much capital is parked in stablecoins, specifically Tether, at any point in time.
- Since Tether (USDT) is a stablecoin that tracksthe USD, an increase in Tether dominance suggests a pullback or correction in cryptocurrencies.
- A simple way to understand it is to think of USD flowing in and out of the market.
- On the other hand, if Tether dominance drops, it means that more capital is being deployed to purchase cryptocurrencies, which is bullish overall for the market.
- If you look at the graph above, you'll clearly see the inverse correlation between Bitcoin (orange) and Tether dominance (black).
- Key support and resistance zones for Tether dominance are marked as well.
- As we're currently trading slightly above local support, marked in green, if we see Tether Dominance fall below those levels, we could expect Bitcoin to continue rallying upwards.
Bitcoin Daily Chart Analysis
- We've tested Bitcoin's yearly open price at 47.2k, and failed to break above the 200 simple moving average (purple).
- Bitcoin has retraced to $45-46k levels, which is a completely anticipated move considering that pullbacks can take place upon breakouts.
- As the overall structure remains bullish, and we see the moving averages cross again, aligning in order for a bull rally, I expect us to retest 50k ranges again.
- Whether we get rejected at those levels, or break through it is unclear, but we'll take it by levels as we always do.
Conclusion
With Tether dominance currently barely holding local support, I think there's a high probability that we see those support levels break down, and see Bitcoin rally upwards once again. This is definitely an indicator that you want to continuously refer to as you trade.
If you like this educational post, please make sure to like, and follow for more quality content!
If you have any questions or comments, feel free to comment below! :)
This is not financial advice. This is for educational purposes only.
Tether Dominance
- Just as Bitcoin dominance refers to Bitcoin's market cap relative to that of the entire market cap, Tether dominance is no different.
- It refers to how much capital is parked in stablecoins, specifically Tether, at any point in time.
- Since Tether (USDT) is a stablecoin that tracksthe USD, an increase in Tether dominance suggests a pullback or correction in cryptocurrencies.
- A simple way to understand it is to think of USD flowing in and out of the market.
- On the other hand, if Tether dominance drops, it means that more capital is being deployed to purchase cryptocurrencies, which is bullish overall for the market.
- If you look at the graph above, you'll clearly see the inverse correlation between Bitcoin (orange) and Tether dominance (black).
- Key support and resistance zones for Tether dominance are marked as well.
- As we're currently trading slightly above local support, marked in green, if we see Tether Dominance fall below those levels, we could expect Bitcoin to continue rallying upwards.
Bitcoin Daily Chart Analysis
- We've tested Bitcoin's yearly open price at 47.2k, and failed to break above the 200 simple moving average (purple).
- Bitcoin has retraced to $45-46k levels, which is a completely anticipated move considering that pullbacks can take place upon breakouts.
- As the overall structure remains bullish, and we see the moving averages cross again, aligning in order for a bull rally, I expect us to retest 50k ranges again.
- Whether we get rejected at those levels, or break through it is unclear, but we'll take it by levels as we always do.
Conclusion
With Tether dominance currently barely holding local support, I think there's a high probability that we see those support levels break down, and see Bitcoin rally upwards once again. This is definitely an indicator that you want to continuously refer to as you trade.
If you like this educational post, please make sure to like, and follow for more quality content!
If you have any questions or comments, feel free to comment below! :)
Not
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