For altcoins, USDT lending rate is a relatively effective trading reference indicator.
Because most altcoins do not have coin-based contracts, the main way to leverage the altcoin market is to borrow USDT to buy coins. Therefore, USDT lending rate can largely reflect the leverage ratio and market sentiment of the altcoin market.
When the USDT lending rate continues to be extremely high (annual interest rate of 50% or more), it means that the market sentiment of the altcoin market is extremely high and the leverage is almost full. In this case, on the one hand, there is almost no room for further leverage, and the market lacks further buying. On the other hand, if the lending rate is too high, some borrowers will find it difficult to bear and choose to sell coins to repay U, forming a selling order, and the possibility of a callback or decline is greater. Therefore, when the USDT lending rate is too high, it usually means that the market risk is too high.
When the USDT lending rate is at an extremely low position (annual interest rate of 5% or less), it means that the current altcoin market sentiment is extremely depressed and the leverage utilization rate is very low. In this case, altcoins are generally at the bottom or the stage bottom, and the probability and space for further decline are relatively small, and there is a large space for market leverage. In this case, buying altcoins often has a high winning rate and profit-loss ratio.
For example, from August 20 to October 20 last year, Binance USDT lending rate was almost always below 5%, and this period was the brewing period of the altcoin market from October 2023 to March 2024; and from February 29 to March 15 this year, Binance USDT lending rate reached more than 60% many times, and continued to be above 40%, and this period corresponds to the end of the altcoin market from October 2023 to March 2024.
From August 6 to October 13 this year, Binance USDT lending rate continued to be below 8%, and once approached 5% in mid-September, which was also the brewing period of the altcoin market.
