USDT dominance is plummeting: a bad sign or the other way around?

The dominance of Tether (USDT), the largest stablecoin by market capitalization, continues to decline. This trend began ahead of the US presidential elections and is ongoing.

Throughout October, this metric decreased by 4%. Over the past year, Tether's dominance has dropped by 28%. This may indicate that investors are looking for new opportunities. Amidst a sharp rise in Bitcoin prices and strong pro-cryptocurrency expectations from the Trump administration, bullish market sentiment prevails. Thus, the decline in USDT dominance reflects that market participants are actively exchanging their stablecoins for BTC and altcoins in anticipation of further price increases.

According to analysts, interest in altcoins is growing, and a new surge in the digital asset market is possible. There are currently reasons to expect that the fourth quarter of 2024 will be favorable for market participants, a notion supported by the fall in stablecoin dominance. Although the current altcoin season index is at 37 as of November 11, 2024, indicating the start of a Bitcoin season—where BTC outperforms most altcoins.

Interestingly, the supply of Tether (USDT) has increased by 34.27% over the past year, rising from 91.73 billion to 126.84 billion. Founded ten years ago, the company now has a market capitalization of $124.07 billion. By contrast, its closest competitor, USD Coin (USDC), has grown by 50.57% since the beginning of the year, yet lags significantly with a market capitalization of $36.67 billion and a supply of 36.68 billion USDC.