Foreign media reported that a rare signal has emerged in the recent crypto market: the market capitalization of USDT, issued by Tether, briefly surpassed that of Ethereum. This shift occurred amid sustained weakness in ETH, prompting renewed market discussion about whether funds are moving from high-volatility assets to stablecoins.
The article argues that this correction is more than just asset rotation. The total market cap of stablecoins dropped by over $7 billion in less than 21 days, while the overall crypto market cap lost approximately $400 billion during the same period, indicating that some funds did not remain on-chain awaiting reallocation but were withdrawn directly from the market.
USDT surpasses ETH
According to the data provided, ETH's market capitalization has dropped to approximately $185 billion, while USDT remains at around $187 billion. This is the first time in nearly eight years that USDT has surpassed ETH in market capitalization.
This shift quickly became a market focus. The article noted that USDT remained relatively stable, while ETH’s market capitalization declined, reflecting investors’ increased emphasis on liquidity and defensive attributes. For Ethereum, the pressure is evident not only in price but also in on-chain activity.
On-chain ETH fund flows are weakening.
As the primary network for DeFi, Ethereum's total value locked has also declined. The article notes that ETH's TVL has dropped to approximately $36 billion.
Based on this analysis, capital leaving ETH reflects not only the sale of spot assets but also a decline in on-chain usage. The simultaneous drop in market capitalization and TVL typically indicates reduced investor risk appetite and lower willingness to deploy funds on-chain.
Discussion around the Stablecoin Quarter is heating up
The article compares this market cycle to previous "altcoin seasons." Typically, after Bitcoin's upward momentum stalls, some capital shifts toward higher-risk altcoins in search of greater upside potential. However, this time, such a rotation is not evident.
The article states that although Bitcoin's market cap share has stagnated around 60%, the ETH/BTC pair has weakened for approximately eight consecutive weeks, indicating that risk capital has not significantly flowed back into altcoins. Meanwhile, stablecoins are increasingly viewed as transaction mediums, settlement tools, and short-term safe-haven assets, making them more favored during periods of volatility.
The article suggests that USDT surpassing ETH is merely a reflection of this broader trend: from the current capital flows, the market favors preserving liquidity over chasing rebounds in highly volatile assets.