USDT dominance near 5% signals a critical juncture for market sentiment, balancing risk-off and risk-on conditions.
Bitcoin trades above $103,000 while ETF outflows and Tether’s $183B supply shape liquidity trends.
A rise or fall in USDT dominance will likely determine whether capital remains in stablecoins or shifts into Bitcoin and altcoins.
USDT dominance is the percentage of the total cryptocurrency market value held in Tether (USDT), a stablecoin that tracks the value of the US dollar. When this number rises, it often indicates that investors are shifting their money into safer assets, rather than riskier currencies like Bitcoin and altcoins. Currently, USDT dominance is close to 5%, a level that has previously acted as an important resistance point.
USDT also holds about 60% of the total stablecoin market. This makes it the most widely used stablecoin, compared to other major competitors such as USDC. This strong position has allowed USDT to remain as the main source of liquidity during both bullish and bearish periods in the market.
Bitcoin is trading close to $103,000 and $104,000 as of early November 2025. It recently dipped below $100,000 but bounced back. Bitcoin's dominance is close to 60%, indicating that the majority of the crypto market's value remains concentrated in Bitcoin, rather than altcoins.
Bitcoin spot ETFs, which drove demand in 2024 and 2025, are experiencing mixed activity. In late October and early November, several ETF trading days recorded net outflows. These outflows occurred when Bitcoin fell below $100,000.
USDT’s supply is growing, with its market cap reaching approximately $183 billion to $184 billion. Tether, the company behind USDT, reported over $10 billion in profits for the first three quarters of 2025. Much of USDT’s backing comes from short-term US Treasury bills, which provide safety and steady returns.
A rise in USDT dominance suggests that traders are shifting funds from volatile assets, such as Bitcoin and altcoins, into stablecoins. This often happens when there is uncertainty in the market. If USDT dominance rises and breaks above the 5% level, it could indicate increased selling in Bitcoin and, especially, altcoins.
However, if USDT dominance starts falling, it may signal that investors still have a risk appetite. In such a case, money would likely follow a tiered flow, beginning with a focus on Bitcoin, before expanding into established, large-cap altcoins like Ethereum and Solana, and eventually trickling down to smaller, riskier altcoins.
It is important to understand that USDT's dominance over the entire crypto market is different from its dominance among stablecoins. USDT can lose share among stablecoins but still see its dominance over the total market fall if the overall crypto market grows faster. Both numbers are important for understanding investor behaviour.
Also Read - What are Stablecoins: A Beginner’s Guide
Global economic and political developments also affect crypto trends. In the United States, the environment in 2025 has become more open toward cryptocurrencies. There have been conversations about stablecoin regulations and clearer rules for digital assets. This has helped build confidence in Bitcoin and stablecoins.
At the same time, spot Bitcoin ETFs have made it easier for institutions to invest in Bitcoin. Even though outflows have occurred recently, these ETFs still hold large amounts of Bitcoin. Discussions about non-dollar stablecoins, such as those backed by the Chinese yuan, are also happening around the world. This shows that stablecoins are becoming part of global finance and politics.
If USDT dominance breaks above 5% and keeps rising, it would likely mean more risk-off sentiment. Bitcoin may attempt to hold above its key support levels, but altcoins are likely to fall more significantly. Trading volume might shift more into stablecoin pairs, and demand for altcoins could weaken. ETF outflows might continue, and overall market confidence could drop.
If USDT dominance gets rejected at this resistance level and starts to fall, it would be a sign that confidence is returning. Bitcoin would likely rise first, followed by major altcoins like Ethereum and Solana. After that, smaller altcoins could also see money flow in. ETF inflows returning would be another strong sign of a risk-on environment. Exchange balances of USDT might also drop as traders convert stablecoins into other digital assets.
If USDT dominance remains stuck around 5% without a clear direction, the market may move sideways. In such times, strong individual stories or developments in certain sectors can lead to short-term rallies. For example, tokens related to artificial intelligence, real-world asset (RWA) projects, or layer-2 scaling solutions could outperform based on news or major updates. In this situation, the movement of Bitcoin and Ethereum might remain limited while different altcoin sectors take turns leading.
Also Read - Stablecoin Blockchains Are Rising: Why Two Giants Might Be Worried
There are several important factors that can help predict what might happen next in the crypto market. The daily close of USDT dominance around the key resistance level is one of them. If it moves clearly above this level, risk-off behaviour may continue. If it drops, it could signal an increase in purchases of Bitcoin and altcoins. ETF flow data is also important. Days with strong net inflows into Bitcoin ETFs often match with price increases.
Another key factor is the supply of stablecoins. If the USDT supply continues to increase and remains stable, it indicates strong liquidity in the market. Any sudden drop in stablecoin supply or problems with the USDT dollar peg would raise concerns. Additionally, any announcement or new law regarding stablecoins from the United States or other major countries could alter market behavior.
USDT dominance is at a crucial level as the crypto market is waiting for a clear direction. Bitcoin is above $103,000, but recent ETF outflows show some caution. If USDT dominance breaks higher, it may indicate that traders prefer holding stablecoins, which could hurt altcoins more. If it drops, risk appetite could return, starting with Bitcoin and then reaching the rest of the market.
Currently, the market appears balanced between caution and optimism. The next strong move will likely depend on whether USDT dominance rises or falls, and whether ETF flows return to positive levels. Stablecoin supply growth and legislative updates will also help shape the next steps.