Technical analysis of Tether Dominance (USDT)

Stablecoins have always been welcomed in the cryptocurrency market due to their price stability. Many investors convert their assets into stablecoins to protect them from severe downward market fluctuations. There are currently numerous stablecoins. Tether (USDT) is considered the first and most important stablecoin in the market. This cryptocurrency is issued with the backing of the US dollar, and each Tether is equivalent to one US dollar.

The word "dominance" in Persian means mastery or domination. When talking about the dominance of a cryptocurrency, it refers to how much of the total liquidity in the market is dedicated to that specific cryptocurrency. Therefore, Tether's dominance is considered a key indicator that shows how much of Tether's market capitalization is compared to the entire cryptocurrency market. Since the market volume of Tether and the liquidity in the market are constantly changing, the USDT dominance index changes instantaneously.

The Art of Market Analysis Using the Tether Dominance Chart

What is Tether Dominance? Simply put, it means how much Tether has entered or left the market, or how much capital has flowed into or out of the Tether market. This fluctuation in Tether's volume is actually an indicator of market behavior and provides signals for traders, and traders should prepare for the topics we will discuss.

Tether USDT is considered the fourth (and sometimes third) cryptocurrency among the countless cryptocurrencies in the market from the perspective of reputable coin ranking websites.

What messages does an increase or decrease in Tether dominance convey to traders?

How does understanding and monitoring USDT dominance affect our trading?

What is the impact of Tether dominance on the market?

Note that the dominance index can generally take an upward or downward trend. Each of these trends conveys messages to traders. These points serve as a simple but practical guide for buying and selling cryptocurrencies. Since Tether entered the market in 2015 until today, the dominance of this cryptocurrency has fluctuated between 1% and 5.5%, and in the years 2022 and 2023, due to the disappointing crypto market, it sometimes increased up to 9%. This means that between 1% and 9% of the total liquidity in the cryptocurrency market is held by this currency.

Of course, note that the relationship between Tether dominance and Bitcoin is much stronger compared to other cryptocurrencies. So, let's examine the bullish or bearish status of this index:

1. Increase in USDT Dominance

Whenever the dominance of Tether on exchanges takes an upward trend, it practically means that the price of cryptocurrencies, especially Bitcoin, is decreasing. Analyzing this issue is not very difficult. An increase in Tether's dominance, given its fixed price, means that the number of sellers of cryptocurrencies and buyers who are converting their assets into Tether is increasing. This only happens when cryptocurrencies are experiencing a price decline. In this way, traders convert their assets into Tether to remain safe from downward fluctuations. For more information about Bitcoin Dominance 🔸, read this article.

2. Decrease in Tether Dominance

Whenever Tether's dominance takes a downward trend, it practically means that the price of cryptocurrencies, especially Bitcoin, is increasing, and it means that the number of people converting their Tether into other crypto market currencies is increasing. This also only happens when other cryptocurrencies are experiencing a price increase. In this way, traders are looking to make a profit in their trades by converting Tether and buying other cryptocurrencies.

Don't rush, read the following text as well. The charts are provided below to satisfy your curious mind.

Mean Transaction VALUE in $USD

🔸 Average Transaction Value of USDT in Daily Timeframe

The average transaction value index in a specific time period indicates the trading volume and people's interest in buying and selling that currency. An increase in the average transaction value index indicates increased activity in the market and capital attraction, while a decrease indicates a decrease in interest in buying and selling that currency. Therefore, the average transaction value index can indicate the market situation and pricing trend of a token.

Active Addresses

🔸 View the chart of the number of active sender and receiver addresses of the USDT protocol in Daily Timeframe

What does an increase or decrease in the number of active addresses in a token indicate?

The number of active addresses in a token indicates the number of addresses that have had at least one transaction on them in a specific time period. An increase in the number of active addresses indicates an increase in the number of users and activities performed on the cryptocurrency network, while a decrease indicates a decrease in activities and users on the network. Therefore, this can be used as an indicator to predict the price trend and fluctuations of the cryptocurrency market.

Active Address: An address that has a balance greater than zero in a wallet (e.g., USDT token) and has had a transaction in the last 24 hours.

🔸 View the chart of circulating tokens affecting supply and demand

The token supply chart in TradingView shows how many tokens are in circulation. This chart can be used as a measure to analyze the demand and supply of the cryptocurrency, as well as to predict the price or monitor the reduction of tokens in the network fee process or token burning. Also, an increase in TVL can be a factor in reducing supply and increasing demand.

USDT New Addresses Chart

🔸 View the chart of the number of unique new addresses that have had their first transaction and transfer on the USDT network in Weekly Timeframe

This index refers to the number of new addresses created on the USDT network. This index shows how many new addresses have been created in the past week, and the evolution of this index can indicate the trend of growth or decline of new users participating in buying and selling USDT.

The value of the token New Addresses index goes beyond just showing the number of new addresses. Changes in this index can help analysts evaluate the behavior of new users and the performance of the network. For example, an increase in the number of new addresses can indicate an increase in the acquisition of new users and possibly an increase in transactions. In any case, for the most accurate analysis of the network, it is better to use a combination of other indicators and data such as trading volume, number of transactions, etc., which will be provided below.

Tether Currency Dominance; A Suitable Tool for Swing Trading

If you are looking to swing trade in the cryptocurrency market, considering the explanations mentioned above, you should always keep an eye on the Tether dominance chart. As you observed, the trend of the Tether cryptocurrency dominance index is completely opposite to the price trend of other cryptocurrencies like Bitcoin. The interesting point is that this is also true in short-term timeframes.

Therefore, you can use even the smallest trends that occur in the dominance index of this cryptocurrency for swing trading. Unlike many analytical tools that may generate false signals, the Tether dominance chart under no circumstances provides you with a false signal.

There are traders who only work on Tether and its buying and selling (of course, with bots) and, given the high volume of buying and selling, they also have a good income, especially exchanges.

According to the explanations given, when analyzing the market and buying and selling, pay attention to Tether and Bitcoin dominance to understand the bullish and bearish trends of the market and act more maturely in your decisions. Also, pay attention to the analyses in the gray boxes and the periodic analyses below; the charts will help clarify the matter.

🔸 Tether Dominance Index

Unique Address Index in Tether Network

Transferred Tokens Index in Tether Network

Tether Network Market Cap Index

Number of Tether Sender Addresses Index