USDT Dominance in Decline; El Salvador's Dollar Bond at Record Lows

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On Tuesday, the broader crypto market saw mixed performances as investors look to be treading cautiously before the release of FOMC's minutes this Thursday. As of the time of writing, BTC remains below the $30k support level despite gaining 1.7% of its market value in the last 24 hours. The largest cryptocurrency by market cap is still very much range-bound with a key overhead resistance level sitting near the $30.6k mark. A clear break above this level could usher in more sustained momentum that will likely propel BTC to surpass the $31.2k resistance level. While all's quiet in the spot market, the BTC-denominated open interest (OI) in perpetual contracts is fast approaching new heights. This growth in OI, when viewed in tandem with the neutral funding rates, may likely foreshadow some major moves within the market.

In a similar vein, ETH, the second largest cryptocurrency by market cap, has been moving in tandem with BTC. As of the time of writing, ETH has failed to defend the $2,000 handle after posting marginal losses from 24 hours ago. Despite the BTC Dominance Index rising to a one-year high and the TVL in DeFi protocols trending lower, most major altcoins are also largely in the green as investors seem to be preparing for another alt-season.

In light of USDT's temporary depeg last week, Tether has since experienced massive redemptions amounting to $10 billion. As of the time of writing, the number of Tether in circulation is now down to 6.51%. There has been a particularly high churn among the largest addresses holding USDT and USDC on the Ethereum network. On May 12, the number of addresses on Ethereum holding at least 1 million USDC has surpassed its USDT counterparts, suggesting that some of these large accounts are off-loading their USDT and opting for the perceived assurance of USDC's full-reserve backing.

Talk of the Town

The eight-week rout that has led to BTC's value dropping by around 55% from its all-time high price has deepened the El Salvadorian government's cumulative losses on their BTC holdings. According to Bloomberg, said losses (that have amounted to approximately $40 million as of the time of writing) are a little more than the cash-strapped nation's next coupon payment on its foreign debt. The volatility in the BTC market amid the recent bearish run seems to have spooked potential buyers of a planned $1 billion BTC-backed bond. Moreover, the boasting of another dip-buying earlier this month came at the cost of a loss of support from the International Monetary Fund, and a demotion by rating agencies. Since then, El Salvador's dollar bonds have been trading at record lows.

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