USDT Under New Scrutiny: Impact on Bitcoin’s Last Uptober Week

  • USDT experienced an increase in activity following regulatory scrutiny.
  • However, a common trading strategy that could have benefited BTC failed.

The US government has reportedly launched another investigation into Tether [USDT]a move some are calling the latest “Tether FUD” tactic.

The timing is raising eyebrows, with some speculating that this is an orchestrated attempt to inject fear and shake out the market ahead of a potential Bitcoin [BTC] outbreak.

Given that over 70% of cryptocurrency trading involves USDT pairs, analysts at AMBCrypto warn of the risks associated with Tether’s centralization.

Any disruption to USDT can send shock waves throughout the market. Especially as BTC heads into the final week of the “Uptober” frenzy.

USDT dominance hits new heights, but there’s a catch

Over the past week, USDT dominance has steadily increased, with daily gains of over 2%. Historically, a rise in USDT dominance often coincides with BTC hitting market tops.

This was reminiscent of its previous close near $70K.

However, the surge in USDT demand, fueled by rising panic, has put significant downward pressure on BTC, which is currently trading at $67K.

This situation underscores USDT’s growing influence on Bitcoin’s price dynamics. Therefore, it is crucial to monitor the effects of the latest investigation surrounding Tether closely.

USDT inflow

Source: CryptoQuant

Interestingly, USDT inflows into exchanges rose dramatically during the late hours as the news circulated, hitting a two-month high of over $2.3 billion.

Despite this increase, USDT dominance remained strong with a daily gain of almost 3%. This suggests that many traders perceived the news as exaggerated or misleading, choosing to maintain their net imports.

However, there is a strong possibility that USDT deposits on exchanges could exceed net outflows in the coming days.

If the current BTC price turns out to be a market bottom, it could attract significant liquidity, potentially driving the price higher.

On the flip side, stakeholders can move their assets to other high-cap altcoins or memecoins and seize the opportunity to exchange USDT for more affordable alternatives.

The last week of October could bring increased activity in the crypto market, with several coins poised for a potential parabolic rally.

Chances of capital change to BTC

Currently, USDT is at a crossroads. The investigation news triggered investor panic and massive selling pressure. Still, the daily chart showed a bullish MACD crossover for USDT dominance.

Tether dominanceTether dominance

Source: TradingView

The increased volatility in the market – triggered by Bitcoin’s drop to near $67K – has led to speculation about a potential pullback to $64K, where the next bottom could be formed.

Despite the fact that 12 hours have passed since the news broke, which typically prompts investors to offload USDT for BTC, traders have yet to sweep the downsides.

This scenario amplifies the potential for a retracement, making the current price a less appealing entry point.


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The coming week is crucial for BTC as its fate depends on the market’s reaction to USDT. Currently, the likelihood of investors strategizing for a parabolic rally appears limited.

This could dampen the chances of the crypto market closing October on a bullish note.

Next: Ethereum’s dominance crashes to 13% – A drop to 9% next before 2025 rebound?

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