Foreign media reports indicate a rare signal in the crypto market recently: the market capitalization of USDT, issued by Tether, briefly surpassed that of Ethereum. This shift occurred amidst a continued weakening of ETH, prompting renewed discussions about whether funds are moving from highly volatile assets to stablecoins.
The article argues that this round of adjustments is not merely a matter of asset rotation. The total market capitalization of stablecoins decreased by over $7 billion in less than 21 days, while the overall market capitalization of the crypto market evaporated by approximately $400 billion during the same period. This indicates that some funds were not remaining on-chain awaiting reallocation, but rather withdrawing directly from the market.
USDT surpasses ETH
According to the data in the article, the market capitalization of ETH has dropped to approximately $185 billion, while USDT has remained at approximately $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 stated 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 reflected not only in price but also in on-chain activity.
On-chain liquidity for ETH weakened in tandem.
As the primary network supporting DeFi, Ethereum's total value locked (TVL) is also declining. The article mentions that ETH's TVL has dropped to approximately $36 billion.
Based on this, the article concludes that the outflow of funds from ETH not only signifies the sale of spot holdings but also indicates a decline in on-chain usage willingness. A simultaneous decline in market capitalization and TVL typically indicates weakened investor risk appetite and a decreased willingness to deploy funds on-chain.
Discussions about "stablecoin season" are heating up.
The article compares this round of market performance to previous "altcoin seasons." Typically, after Bitcoin's upward momentum stalls, some funds shift to riskier altcoins in search of greater upside potential. However, this time, such a rotation is not as pronounced.
The article states that although Bitcoin's market capitalization share has stagnated around 60%, ETH/BTC has weakened for about eight consecutive weeks, indicating that risk funds have not significantly flowed back to altcoins. Meanwhile, stablecoins are more like a medium of exchange, settlement tool, and short-term safe haven, thus gaining favor during periods of volatility.
The article argues that USDT surpassing ETH is merely a microcosm of this trend. At least judging from current fund flows, the market is more inclined to preserve liquidity rather than chase rebounds in highly volatile assets.
