Bitcoin's Surge Past $110,000 Narrows USD-USDT Spread by 97%

Bitcoin's recent climb past $110,000, bringing it within 2% of its all-time high, has significantly tightened the spread between USD and USDT trading pairs. This movement underscores the nuanced differences in how Bitcoin trades across fiat and stablecoin markets, offering insights into underlying demand preferences and liquidity flows.

On Binance, the largest exchange by trading volume, BTCUSD maintained a consistent but narrow premium over BTCUSDT in the days leading up to the rally. The average premium was $36.33, or approximately 0.034%. Despite the small gap, its persistence over the previous weeks indicates subtle demand preferences and liquidity flows that are often overlooked in broader market analyses.

Data from TradingView, covering 5-minute intervals on both pairs between June 29 and July 3, revealed that BTCUSD traded higher than its USDT equivalent 97.7% of the time. The spread peaked at 0.103% on June 30 during the European morning and briefly inverted a few times. Most negative prints occurred around 21:00 UTC, suggesting lower fiat inflows or higher stablecoin usage in late US trading hours.

The spread narrowed sharply during the morning breakout. As Bitcoin surged past $110,000 around 09:40 UTC, the premium compressed to just 0.013%. This suggests that liquidity rapidly shifted toward the BTC-USDT book, or arbitrageurs moved quickly to close the gap as order books thinned. This behavior aligns with historical breakout patterns, where volatility forces alignment between trading pairs to avoid slippage.

Intraday patterns further confirm the role of regional flows in shaping trading dynamics. BTCUSD consistently outpaced USDT between 08:00 and 14:00 UTC, core European trading hours. This points to a modest tilt toward fiat-based execution from desks operating in jurisdictions where US dollar rails are preferred or more accessible.

While a 0.03% spread might seem trivial, it accumulates across billions in notional volume. On a day with $10 billion traded, the gross opportunity from such a spread amounts to $3 million. The data shows that even as the market moves with near-mechanical efficiency, there are still slivers of information in how fiat and stablecoin pairs diverge, especially during high-velocity moments like today’s breakout above $110,000.

The narrowing spread between USD and USDT pairs as Bitcoin climbed past $110,000 underscores the complex interplay between fiat and stablecoin markets. This dynamic highlights the importance of understanding regional liquidity flows and demand preferences, which can provide valuable insights into market behavior and potential opportunities for arbitrage. The consistent preference for dollar settlements, as evidenced by BTC-USD trading higher than BTC-USDT 97% of the time, further illustrates the subtle demand preferences and liquidity flows at play in the market.