A well-known cryptocurrency analyst suggests that a critical metric indicates Bitcoin (BTC) may struggle to break out in the near future.
In a recent thread, crypto trader Justin Bennett informs his 115,800 followers on the social media platform X that the Tether dominance chart (USDT.D) is signaling bearish conditions for Bitcoin.
The USDT.D chart is closely monitored by traders, as it illustrates the proportion of the crypto market cap that consists of the stablecoin USDT.
A rising USDT.D chart is typically seen as bearish for Bitcoin and other cryptocurrencies because it suggests that traders are exchanging their crypto holdings for the stablecoin.
Bennett explains,
“The challenge for BTC bulls lies in the fact that Tether dominance has remained above its previous range highs since February 5th, and it is currently testing this zone as new support. If USDT.D falls back within the range on higher timeframes, a bullish crypto market may emerge. If it fails to do so, expect Bitcoin, ETH, and others to trend sideways or lower. It’s not about predictions; it’s about responding.”
Bennett mentions that he would only adopt a bullish stance on Bitcoin if USDT.D drops below the 4.37% support level.
“Since early February, Tether dominance has called for a cautious approach to crypto. I’ve been saying this for weeks. While we may experience some short squeezes along the way, there’s still insufficient reason to be bullish on BTC, ETH, etc. If the 4.37% support fails, that would change things.”
As of now, USDT.D stands at 4.47%, suggesting that the trader’s support level is currently intact.
Bennett also notes that Bitcoin might be on the verge of a short squeeze.
A short squeeze occurs when traders who have borrowed an asset at a specific price, intending to sell it for less and profit from the difference, are compelled to buy back the assets as the market moves against them, resulting in additional price increases.
“There’s a reasonable amount of buy-side liquidity between current levels and $100,000. After that, we’ll see if we can reach $103,000. The outlook isn’t perfect, but with stocks rallying on hope, there’s a fair chance this sideways movement could lead to Bitcoin shorts being squeezed. All eyes on $103,000.”
Bitcoin is currently trading at $97,271, remaining unchanged for the day.
Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
Check Price Action
Follow us on X, Facebook and Telegram
Explore The Daily Hodl Mix
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should conduct their own research before engaging in high-risk investments in Bitcoin, cryptocurrency, or digital assets. Please be aware that your transfers and trades are at your own risk, and any losses incurred are your responsibility. The Daily Hodl does not endorse the purchase or sale of any cryptocurrencies or digital assets, nor does it act as an investment advisor. Note that The Daily Hodl participates in affiliate marketing.
Generated Image: Midjourney
