Tether flashes mixed signals as Bitcoin sees green – What should you do?

• Bitcoin’s bullish momentum has been strong in the short term
• Tether gave key insights into the market sentiment, but the signals may be slightly conflicting

At press time, Bitcoin [BTC] was about to challenge the $95.4k level for the fifth time this week. The king of crypto formed a short-term range between $93k and $95.4k, and threatened to break out higher as bullish momentum increased across the board.

The rising Tether [USDT] reserves on the biggest crypto exchange, Binance, are another bullish sign for the crypto market. A hike in stablecoin reserves imply high buying power. In turn, the altcoin market could see high volatility, but also possibly outperform BTC.

Tether metrics give mixed signs for the altcoin market

Source: TOTAL3 on TradingView

The TOTAL3 chart captured the market cap of the altcoins, excluding Ethereum [ETH], the largest altcoin. By definition, it also excluded BTC. It has been rising over the past three weeks, after the news of a 90-day tariff pause rolled in.

The gains were made alongside BTC. TOTAL3 is up almost 18%, compared to BTC’s 23.85% since 09 April. The altcoin market cap is now approaching the local highs at $850 billion – A level that it has struggled to breach since March. A breakout beyond this level would be hugely encouraging.

Source: USDT.D on TradingView

Tether’s Dominance chart has been falling in recent weeks too. It is inversely correlated to the crypto market- A falling USDT.D implies greater risk appetite, and bullish conditions for crypto.

At press time, it was below the previous low at 5.09%, and was about to retest the same level as resistance. Sustained movement to the downside would be another bullish sign for the crypto markets.

Source: DXY on TradingView

The U.S. Dollar Index is a measurement of the dollar’s strength relative to a basket of six foreign currencies. Like the Tether dominance, the DXY chart also has an inverse correlation to the crypto market’s performance.

The DXY’s fall below 101 has not recovered. The structure was bearish, and the DXY appeared likely to slide lower in the coming weeks. In turn, this dollar weakness could spur investors to diversify away from the U.S. dollar, which could see demand for crypto increase. However, this is not guaranteed to occur.

Source: CryptoQuant

Finally, the depositing transactions metric is the number of deposits made to the exchange. A hike in the number of deposits of a stablecoin such as Tether would imply heightened buying power in the market.

The 14-day moving average of this metric trended upwards from October to December 2024, but it has been falling in the past three months. April did not see the Tether deposits reverse their downtrend.

Hence, although BTC and the altcoin market appeared to be in a bullish phase, the falling Tether deposits could be an indication of weakness from the bulls. However, as it stands, it might not be big enough to merit short-term traders flipping their outlook bearishly.