Bitcoin Dominance Surges to 61% as Stablecoins Crash: Is a Reversal Imminent?

by

<a href="https://minority-mindset.com/btc-usd/">Bitcoin</a> Dominance Hits 61% While Stablecoins Bleed Out

Bitcoin currently makes up 61.21% of the cryptocurrency market. Meanwhile, stablecoins are showing signs of potential overselling, and Ethereum is struggling to stay above a key price level. Historically, May has been a volatile month for crypto, so caution is advised. This is not financial advice.

RSI closed Tuesday at 75.95. By Wednesday morning it was already at 77.9 and still moving.

According to a post by MooninPapa on X (formerly Twitter), the price has surpassed its previous high from April 17th, reaching above 77.3. It’s now challenging the peak it hit on March 16th, and MooninPapa believes the market is becoming “very very overbought.”

When Three Charts Break the Same Day

Bitcoin currently makes up 61.21% of the total cryptocurrency market. A trader named MooninPapa noted on X that the Relative Strength Index (RSI) for Bitcoin’s dominance closed at 76.35 on Tuesday, just slightly below a previous high of 77.64. This difference is significant. If Bitcoin, Ethereum, and Bitcoin’s market dominance all break through their respective RSI resistance levels on the same day, it suggests a prolonged period of Bitcoin outperformance – a ‘Bitcoin season’ – and potentially much higher prices.

That triple confirmation has not happened yet.

Ethereum finished trading Tuesday slightly above a key resistance level. The Relative Strength Index (RSI) reached 63.69, suggesting strong momentum, but not overbought conditions. While trading volume is generally increasing, it hasn’t yet provided a definitive signal. Trader MooninPapa believes a sustained rally requires consistent daily increases in volume above its average over the course of a week.

Gold prices increased by 1.56% today, boosted in part by comments from Donald Trump suggesting progress in peace talks. However, trading volume for silver fell sharply on Tuesday, as Trump noted on X (formerly Twitter). These silver numbers don’t align with the generally optimistic outlook for precious metals.

Stablecoin Dominance Just Broke Something

The combined market share of USDT and USDC has fallen below a key technical level, known as the TBO cloud. A trader named MooninPapa noted on X (formerly Twitter) that this suggests a significant downward trend. Notably, the Relative Strength Index (RSI) has dropped below 25, which is often seen as a strong indication of overselling.

The last time stablecoin dominance RSI hit that level was March 16. A pullback followed.

In the short term, the recent market dip is actually a positive sign for investments considered ‘risk assets,’ as money is starting to flow back into the market. However, a trader known as MooninPapa pointed out on X that if the Relative Strength Index (RSI) for stablecoins falls below 25, a significant price reversal becomes much more likely – though not guaranteed. He specifically stated it dramatically increases the *probability* of such a reversal.

The Bitcoin dominance picture is complicated by all of this at once.

The TradFi Signals Nobody Is Pricing In

The dollar index briefly rose above a key resistance level on Tuesday but fell back down by Wednesday. Despite this, the index continues to show a pattern of making higher lows. According to a post on X (formerly Twitter) by MooninPapa, the dollar index still needs to reach a higher high to definitively signal an upward trend.

The USD/JPY exchange rate recently surpassed a strong resistance level of 157.33, which had limited its upward movement for several days. This breakout happened around 6 PM on Tuesday, and the new key level to watch is 158.518. According to one analyst, if the exchange rate reaches that point, Japan’s financial authorities (the Ministry of Finance and the Bank of Japan) are likely to step in with more forceful measures to strengthen the yen, which could have a significant impact on the market.

Stock futures, tracking the S&P 500, finished Tuesday down just under 1%. A technical indicator suggesting a downward trend in stock prices has reversed, but trading volume isn’t confirming this upward move. Stocks are rising due to a short squeeze – meaning traders who bet against them are being forced to buy to cover their losses – rather than strong buying interest. This is an important distinction, as genuine buying interest signals a more sustainable rally.

The Nikkei stock index reached a record high on Wednesday, rising 3.25%. While the index surged, one trader, MooninPapa, noted on X (formerly Twitter) that the trading volume seemed unusually high. Meanwhile, the price of WTI crude oil is falling, and is expected to remain below $67 for quite some time, according to MooninPapa’s analysis on X.

May Has a History and the Charts Know It

As I’ve been analyzing recent market activity from MooninPapa’s session, I’m seeing some pretty extreme RSI readings. DOGE hit 92.03, though volume decreased towards the end of the day. Toncoin is even more overbought, reaching 94.55 – a level we haven’t seen since March, which was followed by a 30% price drop. Tron also showed significant momentum, with an RSI of 86.58, the highest it’s been since last August. Finally, Morpho stood out with a solid 10.78% gain on the day.

Stacks experienced a dramatic price increase, jumping 66% in a single trading session with unusually high volume – 18 to 19 times its typical daily level. A user on X (formerly Twitter), MooninPapa, described the activity as a classic “pump and dump” scheme.

The altcoin season thesis runs into a wall if BTC.D RSI closes above 77.64 before today ends.

MooninPapa, on X, believes that market cycles bottoming out tend to create quick, strong gains followed by steep declines. He points to 2014, 2018, and 2022 as examples of this pattern, which has been occurring since 2013. His main focus is protecting capital rather than trying to maximize profits.

As a crypto investor, I’m keeping a close eye on $86,000 for Bitcoin. That’s a key level where past resistance could now act as support. I’m hoping to see BTC hit it, but May will likely tell us if we get there smoothly or if we’ll see a pullback first.

As a researcher, I want to clarify that this article presents a technical analysis based on the sources I’ve used. It’s important to understand that this isn’t intended as financial or investment advice, and readers should not interpret it as such.

Read More

2026-05-06 18:31