A week ago, CoinDesk informed readers about the renewed rotation of funds into dollar equivalents, such as Tether. and USD Coin (USDC) stablecoins like bitcoin retreated from early May highs above $80,000. That combination was an early warning sign of possible full-blown risk aversion in the cryptocurrency market.
Those early warning signs have now become a full-blown trend.
Bitcoin has fallen about 12% over the past week to around $66,800, dragging down the broader crypto market with it, data from CoinDesk shows. Bitcoin’s dominance rate, or its share of the total crypto market, has fallen to 58.5%, reversing gains that had taken it as high as 61.2% in April and early May.
At the same time, tie the world’s largest dollar-pegged stablecoin, has seen its dominance jump to 8.30%, the highest level since late February. USD Coin (USDC) has also risen 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 indicates a clear flight towards dollar liquidity within cryptocurrencies. And that change is increasingly difficult to ignore as BTC loses ground.
This pattern has manifested itself in previous market swoons, including the sharp sell-off from over $90,000 to nearly $60,000 in January and February.
Bitcoin is not alone in the liquidation. Ether (ETH), XRP, and Solana (SOL) each fell between 8% and 11% over the past week. Other coins such as BCH, SUI, and RAO have plummeted by almost 20%. All of this is apparently fueling a clear flight toward dollar equivalents.
Interestingly, traditional markets show no such flight to the dollar. The Nasdaq and S&P 500 are trading near all-time highs, while the U.S. Dollar Index, which measures the dollar against a basket of major currencies, remains stuck in a tight range between 98.50 and 99.50.
