A week ago, CoinDesk informed readers about the renewed rotation of funds to dollar equivalents such as tether and USD Coin (USDC) stablecoins like bitcoin pulled back from early May highs above $80,000. This combination was an early warning sign of potential full blown risk aversion in the crypto market.
These early warning signs have now turned into a full-blown trend.
Bitcoin has fallen about 12% over the past week to around $66,800, dragging the broader crypto market lower with it, CoinDesk data shows. Bitcoin’s dominance rate, or its share of the total crypto market, has fallen to 58.5%, reversing gains that had pushed it as high as 61.2% in April and early May.
At the same time tethers the world’s largest dollar-pegged stablecoin, has seen its dominance jump to 8.30%, the highest level since the end of February. USD Coin (USDC) has also risen back to levels last seen in early April.
While the two stablecoins still make up only 11% of the total market, which is paltry compared to bitcoin, their rising share signals a clear flight to dollar liquidity within crypto. And that shift is getting harder to ignore as BTC loses ground.
This pattern has played out in previous declines in the market, including the sharp selloff from over $90,000 to nearly $60,000 in January and February.
Bitcoin is not alone in the sell-off. Ether (ETH), XRP and Solana (SOL) are each down 8-11% over the past week. Other coins like BCH, SUI and RAO have fallen almost 20%. All of this seems to make for a clear flight to dollar equivalents.
Interestingly, traditional markets show no such flight to the dollar. The Nasdaq and S&P 500 are both trading near record highs, while the US Dollar Index, which measures the greenback against a basket of major currencies, remains stuck in a tight range between 98.50 and 99.50.
