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Yesterday, USDT’s market capitalization briefly surpassed that of ETH at $184.48 billion and then reached $186.07 billion. The move came for the first time in more than 7 years, underscoring the growing importance of the dollar-backed centralized digital currency amid a major decline in Ethereum’s fortunes in the broader bear market.
Arkham Cryptanalysis Company tweeted Regarding this matter:
While Ethereum has regained its #2 position today with a slight increase in the value of ETH, the symbolic shakeup suggests that we are heading towards a future with greater importance for USDT and other stablecoins like USDC, all of which are on the rise.
Here is the ETH/USDT chart for the last 3 months:
Ethereum’s value has been declining in recent quarters, but the capitulation phase has persisted since the beginning of this month, taking it to multi-year lows near $1.5k. The second largest cryptocurrency by market cap was comfortably at its all-time high of $4.9K just 9 months ago, and is now worth less than 1/3 of that milestone.
 The move shows how quickly things can go wrong in the cryptocurrency market. While Ethereum’s market capitalization is still struggling to maintain its second position, Bitcoin is also experiencing losses. However, its total market value is approaching $1.21 trillion and it is not in danger of being replaced anytime soon.
Will USDT become the second cryptocurrency in the long term?
Ethereum has held the #2 spot for over 9 years, and USDT has yet to convincingly overtake it. However, as the supply of USDT remains stable and expands through new issuances, the position could change permanently in the near future.
The stablecoin supply is used to obtain dollar-pegged liquidity in trading and DeFi. At the same time, demand for Ethereum is weak. Unlike normal cryptocurrencies, the market capitalization of stablecoins depends on the number of coins in circulation, which decreases due to the minting and burning processes in the Tether Treasury.
The growing demand for the dollar coin means its supply is likely to grow over time, as more coins are minted rather than withdrawn. DeFi companies are offering passive staking rewards for USDT deposits at a higher rate than conventional banks, and that is driving even more capital into stablecoins, USDT in particular.
Ethereum, the backbone of decentralized finance and smart contracts with over 120 million addresses and significant total value locked in protocols, continues to face selling pressure. The phrase “cooked” shows extreme frustration with the leading programmable cryptocurrency and its lackluster performance.
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