- The stablecoins activity has taken a hit in recent weeks.
- The dominance chart reflected reluctance from market participants to buy assets.
As a seasoned crypto investor with several market cycles under my belt, I’ve learned to pay close attention to trends and patterns in the market. The recent downturn in stablecoins activity has been concerning, as reflected by the decreased dominance of Bitcoin and the altcoin market’s bearish performance over the past month.
As a crypto investor, I’ve noticed that Bitcoin [BTC] has been facing selling pressure in the shorter timeframes, possibly due to the bearish sentiment. However, with the halving event now behind us and the subsequent price retracement nearing its end, it’s plausible that we may enter a prolonged consolidation phase during the summer.
This meant that the altcoin market also saw a bearish performance for the most part.
Over the past month, the trend for most sectors has been downward, with memes being an exception.
To gain insights into the market sentiments of stablecoin users, AMBCrypto examined their behaviors. specifically, they were exploring if there’s a readiness among participants to assume risks again.
User activity has fallen over the past month
Based on information from CryptoQuant, AMBCrypto examined the usage of stablecoins by looking at the graph of unique addresses involved in transactions (both sending and receiving).
Its 7-day simple moving average has trended downward since the 16th of April.
In February, the market saw an upward trend with Bitcoin reaching its highest point in early March. Not long after this peak, Bitcoin surpassed the $70,000 mark.
In recent days, the downward trend indicated decreased engagement and trading action among participants, implying a lack of bullish sentiment.
In simpler terms, the amount of a currency that traders can buy and sell among themselves, known as the exchange reserve, has stabilized between certain limits in the year 2024. Prior to this, there was a significant fall from the 23rd of April to the 10th of May, indicating a noticeable weakening in purchasing power.
This implied that stablecoin holders were less able to spend their stables to buy crypto assets.
As a researcher studying market trends, I noticed an intriguing development on May 13th. A significant increase in stablecoin reserves at cryptocurrency exchanges became apparent. This is favorable news for bulls, indicating that these reserves may continue to grow in the upcoming days.
When can we expect the crypto market to begin trending higher?
The USDT Market Share Chart illustrates the proportion of the entire cryptocurrency market capitalization represented by Tether (USDT).
An uptrend in this metric shows participants preferred holding stables and remaining sidelined.
As a crypto investor, I’ve noticed that a downtrend often occurs in conjunction with a broader market uptrend. In the case of USDT.D, if it holds above the crucial support level of 4.9%, then we can expect it to continue its upward trend and potentially reach the resistance level of 5.79%.
If it unexpectedly decreases further, bulls may view this as a signal to buy, believing the market will eventually recover.
Instead of relying solely on the Tether Dominance chart for your crypto asset purchases, it’s important to conduct both technical and fundamental analyses first.
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2024-05-15 11:03