Crypto traders avoid risk and shelter in stablecoins as the market reaches a turning point

Source: GlassnodeTether (USDT) has actually soaked up a significant percentage of outflows from Binance USD (BUSD) and Circles USD Coin (USDC), pushing USDT to a new all-time high supply of $83.1 billion.In the crypto market, capital typically flows from the majors, like Bitcoin and Ether, into altcoins. The above patterns show that, lately, the capital rotation is taking place away from high-risk altcoins towards low-risk possessions like stablecoins and Bitcoin.Bitcoins relative strength versus altcoin rate momentum Technically, Bitcoins dominance portion over the crypto market, which measures the share of Bitcoins market capitalization in the overall crypto valuation, experienced an uptrend in 2023 before coming across resistance at the 48.35% level.If Bitcoin purchasers are unable to break out above this resistance, the market can anticipate an altcoin rally relative to Bitcoin.Bitcoin supremacy over the crypto market. Source: TradingViewOn the other hand, the TOTAL2 chart, which determines the market capitalization of the cryptocurrency market excluding Bitcoin, had its positive breakout from the triangle pattern reversed, pushing the index back into a bearish triangle pattern that started forming in October 2022.

On-chain analytics firm Glassnode released a report hinting that financiers are rotating capital toward risk-off possessions like stablecoins and Bitcoin. Technicals show that altcoins are at a vital turning point in between a positive and a negative breakout.Glassnodes analysis of Uniswap and futures trading volumes reveals that the uptrend that began in the very first quarter of 2023 began cooling down in April, with regulative concerns and an absence of liquidity promoting risk-off tendencies among traders.The report stated that while it might appear that memecoins triggered a surge in Uniswaps trading volume, a more detailed take a look at Uniswaps pools exposes that most of volume was for leading cryptocurrencies in Wrapped BTC, Ether (ETH) and stablecoins. Additionally, sandwich attacks and bot trading represented a significant quantity of this trading activity. The report read:”If we take into consideration that lots of bots engage in arbitrage or sandwich attacks, the degree of organic trading volume on Uniswap may well account for over two-thirds of all DEX activity.”The futures trading volumes for Ether on centralized exchanges contracted in May, with 30-day typical trading volumes dropping to $12 billion daily against a yearly average of $21.5 billion. Glassnode analysts recommended that the decline in futures trading volumes is an indication that “institutional trading interest and liquidity stays quite weak.”Similarly, the market share for Bitcoin (BTC) perpetuals versus their Ether equivalents shows a huge inconsistency, with 65.5% dominance for Bitcoin. In 2022, the 2 properties had equal shares in the continuous swap space. The pattern has actually shifted significantly in the last year. BTC vs ETH continuous volume supremacy. Source: GlassnodeTether (USDT) has actually absorbed a significant percentage of outflows from Binance USD (BUSD) and Circles USD Coin (USDC), pressing USDT to a new all-time high supply of $83.1 billion.In the crypto market, capital normally flows from the majors, like Bitcoin and Ether, into altcoins. The above patterns show that, recently, the capital rotation is happening away from high-risk altcoins toward low-risk properties like stablecoins and Bitcoin.Bitcoins relative strength versus altcoin cost momentum Technically, Bitcoins supremacy percentage over the crypto market, which determines the share of Bitcoins market capitalization in the total crypto assessment, experienced an uptrend in 2023 prior to encountering resistance at the 48.35% level.If Bitcoin buyers are unable to break out above this resistance, the market can anticipate an altcoin rally relative to Bitcoin.Bitcoin dominance over the crypto market. Source: TradingViewOn the other hand, the TOTAL2 chart, which determines the marketplace capitalization of the cryptocurrency market omitting Bitcoin, had its favorable breakout from the triangle pattern reversed, pushing the index back into a bearish triangle pattern that began forming in October 2022. Related: Ethereum gas fees cool down after May memecoin frenzyCurrently, the overall market capitalization of altcoins is bound by a bearish descending triangle pattern with lower highs and a parallel assistance level of $433.39 billion. The selling would likely accelerate below this level. The market capitalization of cryptocurrencies excluding Bitcoin. Source: TradingViewIf purchasers push greater by constructing support above the parallel resistance at $616.35 billion by weekly closing, altcoins might continue to head higher over the next few weeks.This article is for general info purposes and is not intended to be and should not be taken as legal or investment guidance. The thoughts, views, and opinions revealed here are the authors alone and do not always show or represent the views and opinions of Cointelegraph.
This short article does not include investment recommendations or recommendations. Every financial investment and trading relocation includes threat, and readers should conduct their own research study when making a decision.

Other Questions People Ask

What strategies are crypto traders using to avoid risk as the market reaches a turning point?

As the crypto market approaches a turning point, traders are increasingly shifting their capital from high-risk altcoins to safer assets like stablecoins and Bitcoin. This trend is evident from the significant inflows into Tether (USDT), which has reached an all-time high supply of $83.1 billion. By sheltering in stablecoins, traders aim to mitigate potential losses while waiting for clearer market signals.

How are stablecoins influencing crypto traders' decisions during market volatility?

Stablecoins are playing a crucial role in influencing crypto traders' decisions amid current market volatility. With capital flowing away from riskier altcoins, traders are opting for stablecoins as a safe haven, as indicated by the substantial outflows from Binance USD (BUSD) and USD Coin (USDC) into Tether (USDT). This shift reflects a broader trend of risk-off behavior among investors looking to protect their assets during uncertain times.

What does Bitcoin's dominance indicate about the current state of crypto trading?

Bitcoin's dominance in the market, which has seen an uptrend in 2023, suggests that traders are favoring established cryptocurrencies over altcoins as they seek to avoid risk. Currently, Bitcoin's market capitalization accounts for a significant portion of the overall crypto valuation, indicating a preference for stability. If Bitcoin can break through its resistance level, it may signal a potential rally for altcoins; otherwise, the trend may continue toward safer assets.

Why are crypto traders turning to stablecoins instead of altcoins at this time?

Crypto traders are turning to stablecoins instead of altcoins due to increasing regulatory concerns and a lack of liquidity in the market. The recent analysis by Glassnode highlights that many traders are adopting risk-off strategies, leading to a cooling down of trading volumes in altcoins. This cautious approach is prompting investors to seek refuge in stablecoins and Bitcoin, which are perceived as more reliable during turbulent market conditions.

What impact does the decline in futures trading volumes have on crypto traders' strategies?

The decline in futures trading volumes, particularly for Ether, indicates that institutional interest and liquidity remain weak, prompting traders to reassess their strategies. As futures trading contracts for Ether have contracted significantly, many traders are opting for safer investments like stablecoins and Bitcoin. This shift reflects a broader trend of caution among investors who are wary of potential market downturns and are looking to protect their capital.