The crypto market has once again shown that during sell-offs, investors choose liquidity over technology stories. Against the backdrop of Ethereum’s decline, the US dollar stablecoin Tether has surpassed ETH in market capitalization and become the second-largest asset after Bitcoin.
Ether lost more than 5% in a day and dropped to $1,510. After that, the asset’s capitalization fell below $185 billion, while the largest dollar stablecoin held around $186 billion.
Investors Move Not Out of Crypto, but Into the Digital Dollar
The reshuffling in the rankings does not mean that capital is completely leaving the digital asset market. Rather, it is shifting into a more cautious mode.
When participants sell ETH and move into USDT, they often do not withdraw money to a bank. They park funds in the digital dollar to wait out volatility and keep the ability to quickly return to trading.
That is why the growing role of stablecoins is important. It is not just a defensive reaction. It is an indicator of where traders and funds want to keep liquidity while the market does not give a clear signal to buy risk.
Ethereum Finds Itself in a Vulnerable Zone
The price of ETH has returned to long-term support levels that the market has tested over the past three years. This is an important area for buyers.
If demand appears right here, the asset may get a chance to rebound after a strong sell-off. If support is broken, the market will start to price in a deeper scenario.
The problem is that Ethereum now needs more than just a technical rebound. The asset needs a strong investment thesis that will convince the market to buy ETH again, rather than hold funds in stablecoins.
Stability Has Become Stronger Than Volatility
Bitrue Research Institute representative Andri Fauzan Adzima noted that the current reshuffling shows the market’s preference for stability over ETH’s volatility.
This well describes the mood of recent weeks. Investors are not ready to actively take on risk while major assets are declining and the macroeconomic backdrop remains challenging.
For Ethereum, this is a painful moment. The network remains key infrastructure for smart contracts, DeFi, and tokenization, but the market price of ETH now reflects weak demand for the asset itself.
Stablecoins No Longer Depend Only on the Cycle
In the previous bear market, the supply of stablecoins shrank by more than 30%. Back then, capital left not only tokens but the entire crypto ecosystem.
Now the situation is different. Dollar tokens are hitting new highs even as Bitcoin, Ethereum, and altcoins decline.
According to 21Shares, this is a strong argument that stablecoins have become one of the main real-world uses of the crypto market. Demand for them is no longer as dependent on the cycle phase as it used to be.
Almost 15% of the Market Is Held in Stablecoins
Currently, stablecoins account for almost 15% of the total crypto market capitalization. That is a lot for instruments that do not promise price growth and are mostly pegged to the dollar.
Their strength lies elsewhere. They provide liquidity, fast entry and exit, and a settlement unit for exchanges, DeFi protocols, and payments.
The COO of Bitget Wallet called surpassing ETH an important milestone for the market. According to him, it shows strong demand for reliable and liquid entry and exit channels during volatility.
Internal Changes Have Increased Pressure on ETH
Ethereum is under pressure not only from price. The ecosystem recently underwent significant organizational changes: several executives left the Ethereum Foundation, and the foundation’s staff was reduced by about 20%.
Such events do not mean problems with the network’s operation. But in a weak market, they increase nervousness. Investors are watching management, development pace, and the ecosystem’s ability to maintain leadership more closely.
At the same time, a new nonprofit project called Ethlabs has emerged. It was launched by developers and researchers associated with EF, with support from ETH treasuries Bitmine and Sharplink. This shows that development continues, but the market is currently focusing more on price than infrastructure news.
Some Major Players Are Buying the Dip
Not all participants see ETH’s decline as a reason to exit. Some companies, on the contrary, are using the dip to accumulate.
Sharplink bought Ethereum for the first time in eight months, adding 5,000 ETH. Bitmine, chaired by Tom Lee, also continued buying and increased its position by another 76,000 ETH last week.
These deals show that long-term buyers remain in the market. But for now, their activity is not enough to change the overall picture: ETH is trading under pressure, and stablecoins look stronger in terms of demand.
USDC Has Also Surpassed XRP
The shift in favor of dollar tokens is visible not only in the USDT and ETH pair. USDC from Circle has also overtaken XRP in market capitalization.
XRP dropped to $1, its lowest since November 2024. Its capitalization fell to about $64 billion, while USDC was around $73.6 billion.
This is another signal of the current regime. In a weak market, investors prefer liquidity and a dollar peg over volatile assets with individual narratives.
Why This Is Painful for Ethereum
Ethereum has long remained the obvious number two in the crypto market. It was seen not just as a token, but as the foundation for DeFi, NFTs, stablecoins, smart contracts, and on-chain applications.
But the market evaluates the asset not only by the importance of the network. Price, demand, yield, application activity, competition, and expectations of future growth are all important.
If stablecoins continue to increase their share while ETH loses capitalization, the question arises: what new reasons will make investors hold Ether again, rather than use Ethereum infrastructure through dollar tokens?
What Is Next?
For Ethereum, the key task will be to hold long-term support and restore demand for the asset itself. Not only a technical rebound is needed, but also a stronger story around ETH usage, network yield, and application development.
For stablecoins, the situation looks different. They have already proven to be in demand even in a weak market. Their role is becoming broader: they are a settlement layer, a liquidity tool, and a way to wait out volatility within the crypto ecosystem.
The main takeaway is simple. USDT overtaking ETH has become a symbol of changing sentiment. The market now prefers the digital dollar to risky assets. Ethereum remains a crucial network, but it needs to prove again that ETH as an asset can compete for capital during a period when investors are choosing stability.
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