Altcoins at risk as USDT dominance nears 4.8% – Why this is good news
But with $2.7B flooding into yield-bearing stablecoins, a major altcoin rebound could be next.
Key takeaways
USDT dominance is expected to climb, potentially triggering a short-term altcoin correction similar to April 2025. However, rising stablecoin demand and support could cause strong altcoin rebound.
The market could face some turbulence in the coming weeks, as analysts expect Tether [USDT] dominance to rise to a level that last triggered a sharp altcoin correction in April 2025.
This move is often seen as a flight to safety, draining liquidity from riskier assets like altcoins.
However, the stablecoin story isn’t just about caution. Ethena’s [ENA] USDe has added $2.7 billion in supply, amid heavy support for the sector.
Once USDT dominance peaks, that sidelined liquidity could rotate back into altcoins, opening the door for a strong rebound.
Analyst warns of sharp correction
According to Web3Niels, co-founder of Ted Labs and partner at Bybit, USDT dominance could rise to 4.7%-4.8% in the coming weeks; levels that coincide with sharp altcoin corrections.
Drawing parallels to April 2025, he warns that such a spike in stablecoin dominance often is a sign of a flight to safety, draining liquidity from altcoins and triggering a downturn.
However, he also suggests that this phase may present a “golden buying opportunity,” as liquidity typically rotates back into altcoins once USDT dominance peaks.
Based on previous market cycles, a reversal below the 4.8% mark could be the start of an altcoin resurgence heading into late Q3 2025.
Yield bearing stablecoins dominate supply growth
While USDT dominance may be rising, the real momentum in the stablecoin sector is being driven by yield-bearing assets.
According to data from Artemis, Ethena’s USDe has added a staggering $2.7 billion in supply since the GENIUS event on the 18th of July — surpassing even USDT’s $2.47 billion growth.
This shows growing investor appetite for yield-generating stablecoins over traditional options like Circle’s USDC, which saw a $797 million decline.
As capital shifts into stablecoins offering returns, their growing influence could influence the next wave of crypto liquidity flows.
Global momentum builds
As USDT dominance temporarily drains risk-on appetite, the broader stablecoin narrative continues to gain strength.
JPMorgan CEO Jamie Dimon recently acknowledged that stablecoins — unlike Bitcoin — serve real customer demand.
His remarks came alongside the firm’s partnership with Coinbase, allowing Chase users to convert reward points into crypto.
“I’m a believer in stablecoin, a believer in blockchain, not personally a believer in Bitcoin itself, but you’re the customer – I don’t like to tell customers what they can and can’t do with their money.”
Meanwhile, the U.S. House’s passage of the GENIUS Act has catalyzed similar regulatory efforts across Asia.
Countries like South Korea, Thailand, and the Philippines are advancing frameworks for fiat-pegged tokens. Regional giants like JD.com and Ant Group are also exploring stablecoin issuance.
