A closely followed crypto analyst says one key metric indicates Bitcoin (BTC) may have a hard time breaking out anytime soon.
In a new thread, crypto trader Justin Bennett tells his 115,800 followers on the social media platform X that the Tether dominance chart (USDT.D) is flashing bearish for Bitcoin.
Many traders closely watch the USDT.D chart as it shows how much of the crypto market cap is comprised of the stablecoin USDT.
A bullish USDT.D chart is generally considered bearish for Bitcoin and other cryptocurrencies as it indicates traders are unloading their crypto holdings in favor of the stablecoin.
Says Bennett,
“Here’s the challenge for BTC bulls: Tether dominance has held above its previous range highs since February 5th, and it’s now testing this area as new support. If USDT.D drops back within the range on the high timeframes, then we have a bullish crypto market. If it can’t, expect sideways to lower for BTC, ETH, etc. It’s not about forecasting; it’s about reacting.”
Source: Justin Bennett/X
The trader says he would turn bullish on Bitcoin only if USDT.D loses the 4.37% level as support.
“Tether dominance has suggested a cautious approach to crypto since early February. I’ve said it for weeks. I’m sure we’ll encounter short squeezes along the way, but there’s still no reason to be bullish on BTC, ETH, etc. If 4.37% fails, that changes.”
Source: Justin Bennett/X
USDT.D is at 4.47% at time of writing, indicating that the trader’s support level is holding.
The trader also says that Bitcoin may be setting the stage for a short squeeze.
A short squeeze happens when traders who borrow an asset at a certain price in hopes of selling it for lower to pocket the difference are forced to buy back the assets they borrowed as momentum moves against them, triggering further rallies.
“Decent amount of buy-side liquidity between current levels and $100,000. Then we see if gramps can hobble to $103,000. It’s not pretty, but with stocks rallying on hopes and dreams, there’s a decent chance this sideways chop ends with Bitcoin shorts getting squeezed. All eyes on $103,000.”
Source: Justin Bennett/X
Bitcoin is trading for $97,271 at time of writing, flat on the day.
Generated Image: Midjourney
