For the first time in years, the crypto rankings experienced a major shake-up. Tether’s USDT briefly overtook Ethereum to become the second-largest cryptocurrency by market capitalization.
At the peak of the crossover, USDT’s market cap climbed to approximately $186.06 billion. It narrowly surpassed Ethereum’s valuation of around $185.66 billion as ETH traded in the $1,500-$1,600 range. This occurred during a broader market downturn as per on-chain data.
Although Ethereum later reclaimed the second spot, the event marked a historic moment. It ended ETH’s more than seven-year dominance as the market’s second-largest digital asset.
Why Did USDT Overtake Ethereum?
Unlike Ethereum, whose market value fluctuates largely based on price movements and investor sentiment, Tether’s market capitalization grows when new USDT tokens are issued. This meets demand for dollar liquidity.
As risk appetite weakened across crypto markets, investors increasingly shifted toward stable assets, boosting USDT’s circulating supply.
By mid-2026, Tether reported holding more than $193 billion in reserves backing USDT in circulation. The company also generated more than $10 billion in profits during 2025. As a result, it is one of the most profitable firms in global finance.
Today, USDT controls an estimated 70% of the stablecoin market. This cements its role as the dominant source of liquidity across the crypto ecosystem.
Is Ethereum Losing Its Influence?
- The crossover has reignited debate about Ethereum’s shrinking share of the broader crypto market.
- Market estimates suggest ETH’s dominance has fallen below 10% in some measurements. This is down sharply from the 18%-20% range it regularly commanded during previous market cycles.
- While Ethereum continues to lead in decentralized finance, smart contracts, NFTs, and developer activity, investors appear to be prioritizing liquidity and stability. This is especially evident during the current market downturn.
- As one analyst noted, a stablecoin surpassing Ethereum would have sounded unimaginable just a few years ago.
Could This Signal a “Stablecoin Season”?
Several analysts said the milestone may indicate the beginning of a “stablecoin season.” In this phase, capital entering crypto remains parked in stablecoins rather than flowing immediately into riskier assets.
With USDT supply now approaching $186 billion, many see it as a massive pool of potential buying power. It is waiting for the next market catalyst.
However, Tether’s growing influence also brings renewed scrutiny. Regulators continue to closely monitor the company’s reserve composition and transparency practices, given the enormous scale of its operations.
Despite the temporary flip, Ethereum still settles more on-chain value. It also supports the largest developer ecosystem and powers much of crypto’s financial infrastructure.