Tether's dominance reached 6% in November – Why is this a worrying signal?

November 2025 marks an important milestone as the Tether Dominance index (USDT.D) — representing the market capitalization ratio of USDT to the total crypto market capitalization — officially surpasses the 6% threshold. Notably, USDT.D also breaks down the downtrend line that has persisted since 2022, a signal that was once regarded as a solid “fortress” of the market.

This development has raised many concerns among analysts. The fact that USDT.D has broken through long-term resistance often signals the beginning of a deep correction or even a prolonged bear market phase for the entire crypto market ecosystem.

The significance of the increase in USDT.D in the context of the market in November

According to data from TradingView, USDT.D reached 6.1% on November 18 before slightly adjusting to 5.9%. Earlier in the month, this index remained below 5%, reflecting the increasingly cautious sentiment of investors. Instead of allocating funds to undervalued altcoins, most of the capital flow has shifted towards USDT — the stablecoin with the highest liquidity in the market.

History has shown a strong negative correlation between USDT.D and the total market capitalization of the crypto market. Therefore, the breakdown of the USDT.D trend line that has lasted nearly four years could be a sign of a deeper downturn across the market.

USDT.D compared to Total market capitalization | Source: TradingViewMany experts predict that USDT.D will continue to rise to 8% by the end of the year, implying that the bear market may have started to form as early as November. This forecast is further supported by the increasing concern sentiment with no signs of easing.

Volatility in the stablecoin market: Capital outflow from the system

The famous analyst Milk Road has pointed out a significant change in the stablecoin market. Data from DefiLlama shows that the total market capitalization of stablecoins has sharply fallen from 309 billion USD at the end of October to 303.5 billion USD in November — equivalent to a decrease of about 5.5 billion USD in less than a month. This is the first significant drop since the bear market of 2022. The DefiLlama chart also indicates that after four years of continuous growth, the stablecoin market capitalization curve has flattened and started to trend downward.

Market capitalization of Stablecoin | Source: DefiLlama. The combination of shrinking stablecoin market capitalization and a sharp increase in USDT.D reflects a broader trend: investors are not only selling altcoins to switch to stablecoins but are also withdrawing stablecoins from the market. Milk Road notes: “The expansion of stablecoin supply is a sign of new liquidity flow. When this supply stabilizes or decreases, it indicates that the money flow driving growth has cooled.”

Nevertheless, Milk Road still views the market picture positively. He believes that this is not necessarily a sign of a crisis, but rather that the market is operating with less 'fuel' after many years of rapid growth. Such changes are often a precursor to the next major price fluctuations.

Divergent trend: Stablecoins rise on exchanges

Additionally, the latest report from BeInCrypto notes a contrasting development: although the total market capitalization of stablecoins has fallen, the amount of stablecoins held on exchanges has increased in November. This indicates that a portion of investors is taking advantage of the downturn to prepare for end-of-year opportunities, rather than completely withdrawing from the market.

This rewritten version helps convey information clearly and professionally, while emphasizing the important analyses and insights regarding the downtrend in the crypto market in November 2025.

Mr. Teacher