Bitcoin News Today: Capital Reallocates as Stablecoin Dominance Fades

A shift in capital flows is evident as USDT’s market dominance faces a bearish retest near 4.55%, suggesting potential outflows from stablecoins and a reallocation into riskier assets like Bitcoin and altcoins. This trend is underscored by on-chain data and technical analysis indicating that a sustained decline in USDT’s share could further support Bitcoin’s upward momentum and broader crypto inflows. The development aligns with historical patterns where falling stablecoin dominance correlates with rising prices in major cryptocurrencies, particularly during periods of heightened institutional and retail participation [2].

The recent approval of spot bitcoin ETFs has been a catalyst for increased capital inflows into the broader crypto market, particularly in the U.S. and China Hong Kong. These developments are reshaping investor behavior, with Bitcoin attracting over $4.6 trillion in fiat on-ramps between July 2024 and June 2025—nearly double the inflows for any other crypto asset. This trend is further supported by a shift in investor sentiment, as evidenced by declining USDT dominance and rising transaction volumes for altcoins, suggesting a transition from stablecoin holdings to risk assets [1].

The bearish technical setup for USDT dominance is reinforced by a rising-wedge breakdown, with key resistance now retesting near 4.55%. Analysts and traders are closely monitoring this level, as a sustained move below it could open the door to further downside targets at 4.35%, 4.15%, and even sub-4%. Such a continuation of the bearish trend would likely encourage further inflows into Bitcoin and altcoins, particularly as Bitcoin itself has recently broken above key resistance levels. The inverse correlation between USDT dominance and Bitcoin’s price movement has been a recurring theme in recent cycles, and current data suggests this dynamic is still at play [2].

Capital reallocation is also being influenced by macroeconomic factors, including the broader adoption of stablecoins and regulatory developments across major markets. While USDT and USDC continue to dominate global stablecoin flows, newer entrants like Circle’s EURC and PayPal’s PYUSD are gaining traction, particularly in the European and U.S. markets. These developments reflect a broader diversification of stablecoin usage and a potential shift in capital flows that could further weaken USDT’s dominance and accelerate inflows into risk assets [1].

Institutional participation, driven in part by the approval of ETFs, has also contributed to a more liquid and structured market environment. This has allowed for greater diversification into altcoins, with investors seeking exposure to projects with strong fundamentals and real-world use cases. The rise of altseason—characterized by a sharp decline in Bitcoin’s market dominance and a surge in altcoin prices—has historically coincided with periods of heightened investor optimism and capital rotation away from stablecoins [3]. The current market environment, marked by declining USDT dominance and rising altcoin volumes, is increasingly resembling conditions seen during previous altseasons.

As the market continues to evolve, investors are advised to closely monitor key technical levels in USDT dominance and track capital flows into Bitcoin and altcoins. A sustained bearish bias in USDT.D would reinforce a favorable backdrop for Bitcoin and other risk assets, while a recovery above the 4.55% threshold could signal renewed stablecoin demand and a potential shift in market sentiment. Traders and portfolio managers are increasingly using these signals as part of their risk-allocation strategies, adjusting exposure to Bitcoin and alts based on the direction of capital flows and broader market conditions [2].

Source:

[1] BTC, USDT, USDC Lead Global Flows: Chainalysis (https://www.coindesk.com/business/2025/09/06/bitcoin-and-stablecoins-dominate-as-india-u-s-top-2025-crypto-adoption-index)

[2] USDT Dominance Retest Near 4.55% Could Support... (https://www.bitget.com/news/detail/12560604952219)

[3] What is Altcoin Season? When is Altseason in September... (https://tangem.com/en/blog/post/what-is-altseason/)