Dominance of stablecoins USDT+USDC: short- and medium-term expectations.
Let's start with the conclusions. In the short term - on Friday afternoon, we are expecting another attempt to increase the dominance of stablecoins. Accordingly, another attempt to correct the market. During this time, a large pool of data on the labor market will be released in the States, so the data may indeed provide a reason for movement.
NO - the question remains open as to how high BTC will rise by that time. Because so far there are still no signs of buyer weakness. There is only a downtrend on the 5-minute timeframe. But on longer timeframes, uptrends remain.
And there is still room for stable dominance to fall, for example, to supports on higher timeframe EMAs.
In the medium term - after this rise in stablecoin dominance, we expect a continuation of its decline. Accordingly - we expect the market to rise, already more confidently.
Regarding the overview:
Although the dominance of USDT + USDC broke the growth figure 'Dragon' from the March 25 review - it has achieved its first target. On Wednesday, during the market correction on negative macro data from the USA.
In that review, we talked about the pattern targets of 7.36% and 7.86%. At the same time, we initially wrote about the second target - 'the complete one, which is not a fact that it will be achieved'. As a result, yesterday dominance indeed reached the first target and slightly above - to 7.38%. But this was clearly not the pattern we were initially expecting.
From there, dominance has gone to a new low - currently holding around 7.08%. The last time it was at this level was on March 7.
On April 28, we made the last update on stablecoin dominance and wrote that the potential for a bounce in dominance looks limited, with a target in the range of 7.45-7.54%. We are keeping this forecast in force. Although at least squeezes higher are indicated. Otherwise, the correction of Bitcoin to $87,000 - $88,000 will be in question.
The first thing that stands out on the dominance chart - yesterday's rise broke through the descending trend line since April 7. That was when the market began to rise. And today we are seeing a successful retest of the breakout. This, in theory, confirms the potential for a bounce in dominance. And in general, it vividly shows that the influx of stablecoins into volatile assets may stall for some time.
Meanwhile, the monthly candle of stablecoin dominance closed red with a bearish shadow on top. Our indicator also indicates the prospects for a decline in dominance in the medium term; since April 22, there has been a steady downtrend on the 12-hour and daily timeframes. Now it is important to maintain the trend and confirm it with signals from higher timeframes.
The KEY signal for a strong market rise remains the same - for a full return to a bull market, stablecoin dominance must fall below the range of 6.38-6.68%. All the main, CORNERSTONE supports are concentrated there, which currently essentially divide the scenarios of 'bull market' and 'bear market':
- EMA 50 of the monthly timeframe,
- Ascending trend support since June 2022,
- Ascending trend support since June 2019 (indicated by a dotted line),
- important horizontal level 6.38%.
