A week ago, CoinDesk informed readers about the new rotation of funds into dollar equivalents such as Tether. and stablecoins USD Coin (USDC) in the form of bitcoin retreated from early May highs above $80,000. This combination was a harbinger of potential full-blown risk aversion in the crypto market.
These warning signs have now turned into a real trend.
Bitcoin has fallen about 12% over the past week to around $66,800, taking the broader crypto market with it, according to CoinDesk data. Bitcoin’s dominance rate, or its share of the total crypto market, fell to 58.5%, reversing gains that pushed it as high as 61.2% in April and early May.
At the same time, attach the world’s largest dollar-pegged stablecoin, saw its dominance climb to 8.30%, the highest level since late February. USD Coin (USDC) has also climbed back to levels last seen in early April.
While the two stablecoins still represent only 11% of the overall market, which pales in comparison to bitcoin, their growing share signals a clear flight to dollar liquidity within crypto. And this change is becoming increasingly difficult to ignore, as BTC loses ground.
This trend has occurred during previous market fades, including strong sell-offs from over $90,000 to nearly $60,000 in January and February.
Bitcoin is not alone in the sale. Ether (ETH), XRP, and Solana (SOL) each fell 8-11% over the past week. Other coins such as BCH, SUI and RAO plunged almost 20%. All this seems to be fueling a clear flight towards dollar equivalents.
Interestingly, traditional markets do not show such a flight to the dollar. The Nasdaq and S&P 500 are both trading at record highs, while the U.S. Dollar Index, which measures the greenback against a basket of major currencies, remains stuck in a tight range between 98.50 and 99.50.
