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What is Dominance Tether and what effect does it have on the cryptocurrency market?

دامیننس dominance تتر چیست

Tether It is known as the first and largest stablecoin in the cryptocurrency market. The price of Tether is equal to one US dollar. This stablecoin was launched in July 2014 by iFinex. Currently, most exchanges support the USDT digital currency, and the largest volume of transactions is related to this stable coin. Therefore, it can be said that Tether transactions in the cryptocurrency market have a significant impact on the market as a whole. In this article, we will first discuss the general review of USDT stablecoin and then the effect Dominance Tether on the digital currency market We will examine Stay with the country of blockchain.

What is Tether Stablecoin?

What is Tether Stablecoin?
Source: freepik.com

Tether is a stable digital currency whose price is always equal to one US dollar. Stablecoins are actually cryptocurrencies with a fixed price that are backed by dollars. In simpler terms, for each unit of these stablecoins, one unit of US dollars is kept by their creation team; But some stablecoins are backed by different backings like gold, precious commodities or other digital currencies. Also, another type of stable coins, known as algorithmic stable coins, find price stability through mathematical formulas and supports such as cryptocurrencies.

In any case, it can be said that the goal of all stablecoins is to equalize the price with the dollar and protect people’s assets against the fluctuations of the cryptocurrency market. USDT stablecoin started its work in 2014. This stable was created by ifinx company. Ifinx is the parent company of Tether stablecoin and Bitfinx centralized exchange.

Company Tether Ltd At the beginning of his work, he announced that each unit of USDT has a backing equal to one US dollar; But in a 2021 report published by Tether, it was found that only 2.9% of USDTs are backed by dollars and more than 65% of these tokens are backed by unsecured promissory notes. This has greatly increased doubts about the first and most widely used stablecoin. Many experts believe that if the majority of the market sells their Tether stablecoins due to fear, the assets of this company will not be enough to pay the users.

What is the backing of the USDT stablecoin?

Tether token cannot be mined and only Tether Ltd It can create and distribute this stablecoin. Also, the total supply of this stablecoin is not limited and can be created in any amount. Tether Ltd does not provide users with any information on how to multiply stable Cuban Tether and only publishes a daily report on the number of Tethers multiplied on its website.

At the beginning of its activity, Tether Ltd said on its website that it physically keeps one dollar in a bank deposit for each Tether unit; However, this has changed since stablecoin Tether experienced problems in 2016. The Tether company currently provides the following list as Tether stablecoin supports.

Tether stablecoin support
Source: tether.io
  • 79.62% of cash, cash equivalents, other short-term deposits and commercial bonds (only 10.25% of this type of support is kept in cash.)
  • 5.25% of corporate bonds, funds and precious metals
  • 6.77% of guaranteed loans
  • 8.36% of other investments, including various tokens

The remarkable thing about the supports announced by Tether is that there are no valid documents to prove the existence of these supports. Also, the not so good history of the Bitfinex exchange in manipulating the price of Bitcoin in 2017 and all kinds of accusations, including participation in money laundering, have caused concerns about Backed by USDT stablecoin increase greatly.

Also, another issue that puts the assets of Tether stablecoin users at risk is the use of a feature called Black List in the smart contract structure of this stablecoin. This feature allows the Tether development team to block people’s assets whenever they want.

Despite all these problems, the Tether stablecoin is still considered the most popular stablecoin in the cryptocurrency market. The total market capitalization of the USDT stablecoin is currently close to $67 billion. This stablecoin is in third place after Bitcoin and Ethereum, and its dominance on the market is about 6.59%. for this reason Check Dominance Tether And its behavior at different times can provide investors with a very good view of the market situation. In the continuation of the article to review The role of dominance tether We look at the whole cryptocurrency market.

What is Dominance Tether?

What is Dominance Tether?
Source: blog.cryptostars

Generally Dominance It means mastery or dominion. Dominance Tether It means that stablecoin Tether dominates the cryptocurrency market. In simpler terms, Tether dominance indicates the share of Tether digital currency in the entire cryptocurrency market. The total value of the Tether market or market cap is obtained from the product of the number of tokens in circulation by the price of Tether, and since the price of Tether is always approximately equal to one dollar, it can be said that the total value of the USDT market is equal to the tokens in circulation of this stablecoin.

Dominance Tether It is obtained by dividing the market value of Tether by the total market value of cryptocurrencies. An increase in Tether dominance indicates an increase in the number of USDT tokens in circulation and a decrease Dominance Stablecoin USDT It indicates the decrease in the number of Tether tokens in circulation. Tether’s dominance is important because its increase indicates the sale of digital currencies by traders and their conversion to USDT, and its decrease indicates the conversion of Tether to other cryptocurrencies.

when Dominance Tether increases, it can be concluded that most of the traders are selling their holdings and there is a possibility that the whole cryptocurrency market will fall. Also, the decrease of Tether dominance can be concluded that the traders are converting their stablecoins to other cryptocurrencies and there is a possibility of market rise.

The relationship between Tether and Bitcoin dominance

In normal conditions and when the market trend is clear, attention is usually paid to Teter Dominance Chart can’t In this situation, all attention is on the dominance of Bitcoin on the market; But in a situation where the market trend is changing, considering the role of USDT in market stability, Tether Dominance chart analysis can be of outstanding help in future market analysis.

Bitcoin Dominance Analysis It can help investors to recognize when the rise of Bitcoin ends and the rise of altcoins begins. When Bitcoin’s dominance declines, it indicates that traders are shifting their holdings to other altcoins.

Checking Bitcoin Dominance can be of great help in identifying when the altseason begins. But Dominance Tether It shows the general situation of the cryptocurrency market. When the confidence in the cryptocurrency market decreases, traders convert their holdings to USDT, and conversely, when they are bullish on the market, they convert their stablecoins to Bitcoin and other altcoins.

In simple terms, Increasing the dominance of Tether It shows that people are selling their cryptocurrencies. For this reason, the price of digital currencies such as Bitcoin and altcoins decreases during such periods due to low demand. Also, when people start converting their USDTs to other cryptocurrencies, Tether’s dominance will decrease and the demand for other cryptocurrencies will increase rapidly. So if the dominance of USDT increases, the price of cryptocurrencies will decrease, but if its dominance decreases, the price of cryptocurrencies will increase.

Impact chart below Increasing the dominance of Tether It shows the price of Bitcoin. In this chart, the price of Bitcoin is shown in orange color and Dominance Tether is shown as a candlestick. As you can see, there is an inverse correlation between Bitcoin price and Tether dominance. With the increase of Bitcoin, the dominance of Tether has decreased and with the decrease of the price of Bitcoin, the trend of Tether’s dominance on the cryptocurrency market has increased.

The relationship between Tether and Bitcoin dominance
Source: blog.cryptostars

also Increasing Tether dominance on the cryptocurrency market It also indicates a decrease in the value of the whole market or a decrease in the market cap. In the graph below, the effect of increasing Tether’s dominance on the total market value can be seen. In this chart, the total market value is shown in orange and Tether’s dominance is shown as a candlestick. As shown in the chart, as Tether’s dominance over the market increases, the market cap of the cryptocurrency market decreases.

The relationship between Dominance Tether and Market Cap
Source: blog.cryptostars

Using Dominance Tether to predict market trends

Many times the market trend of the digital currency market is not exactly clear. In these situations, analysts use Dominance Tether to predict the future of the market. In most cases, when the so-called market is in the range or a strong upward or downward wave has started, analyzing the market trend is very difficult. In these cases, use support and resistance lines in the chart Dominance Tether It can help analysts to predict the overall trend of the market.

For example, after the 52% drop in Bitcoin price in 2022 and its fall from the range of $67,000 to $30,000, Dominance Tether increased by about 2%. In the diagram below the effect Increasing the dominance of Tether It can be seen precisely when the price of Bitcoin drops. When Bitcoin was in the $67,000 range in November, Tether’s dominance reached its support range (about 2.5%). At this time, the price of Bitcoin fell to the range of $30,000 and Tether’s dominance reached 5.3%. In this graph, the inverse correlation between Bitcoin price and Tether dominance is quite clear.

Using Dominance Tether to predict market trends
Source: dailypriceaction.com

How to check Dominance Tether chart?

As mentioned, Dominance Tether It is obtained by dividing the number of USDT tokens in circulation by the total market value of cryptocurrencies. The Tether Dominance chart can help cryptocurrency market users and traders to have a more accurate analysis of market conditions. Users and traders can use sites such as CoinMarketCap and TradingView to view the Dominance Tether chart. To view the Dominance Tether chart in TradingView, users just need to search the term USDT.D in the chart section. Also, to see the dominance of Tether in the Coin Market Cap, it is enough to go to the section chart Visit.

Teter Dominance Chart
Source: tradingview.com

FAQ

Questions and answers of the blockchain homeland
  • What is Dominance Tether?

In general, dominance indicates the percentage share or dominance of a cryptocurrency in the digital currency market. USDT stablecoin is the most widely used stablecoin in digital currency market transactions. Tether dominance is obtained by dividing the number of USDT tokens in circulation by the total value of the cryptocurrency market and represents the percentage of the Tether market share of the total cryptocurrency market.

  • What is the use of Dominance Tether?

During market downturns, traders try to preserve the value of their assets by converting their digital currencies to Tether. For this reason, when the market declines, Tether’s dominance increases. Also, in the opposite case and when investors hope for an increase in prices in the market, they convert their stablecoins to other digital currencies in order to make a profit, in which case Tether’s dominance decreases. Therefore, checking Dominance Tether can help traders in analyzing the market trend.

Conclusion

Tether digital currency is considered the first and most widely used stablecoin in the cryptocurrency market. Despite all the problems with Tether’s support and the lack of transparency of its financial information, this stablecoin is still the most widely used stable token in the cryptocurrency market. For this reason, checking Dominance Tether can provide traders with very valuable information about the market situation. In this article, we examined the USDT stablecoin and examined the impact of Tether’s dominance on the market. What do you think about the effect? Dominance Tether What is the cryptocurrency market? Can its analysis provide users with a correct understanding of digital currency market conditions? Share your comments and experiences with us.

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