Stablecoins such as USDT gaining traction, with a near 4.8% dominance in the altcoin market - and the reasons behind this development being cause for optimism.
The stablecoin narrative continues to gain strength, with Tether (USDT) leading the charge. Despite a brief period of USDT dominance in April 2025 causing a short-term altcoin correction, the subsequent months have shown signs of a potential strong rebound in altcoins.
The rise of USDT dominance, as evidenced by its share of blockchain transaction fees and market supply, correlated with an altcoin correction. This temporary shift in investor preference towards stablecoins over riskier assets was followed by a rebound once USDT dominance peaked and liquidity rotated back into the altcoin market.
USDT's dominance is reflected in its significant blockchain activity, accounting for about 40% of transaction fees across nine major blockchains in mid-2025. This activity underscores its role as a liquidity hub and medium of exchange supporting cross-chain transfers.
The driving force behind USDT's dominance is its utility in real-time transfers, cross-border remittances, and as a digital dollar substitute in regions with currency instability. This increased demand for stablecoins is further strengthened by regulatory clarity, such as the U.S. GENIUS Act and the EU MiCA, and growing fintech adoption.
Analysts predict that after the peak in USDT dominance, sidelined capital tends to flow back into altcoins, enabling a rebound. This dynamic reflects the evolving role of USDT not merely as a store of value but as an essential liquidity and transactional tool within the crypto ecosystem.
Meanwhile, the stablecoin sector is showing signs of strong demand, with Ethena's [ENA] USDe adding significant supply, to the tune of $2.7 billion. This addition indicates a high level of support for the stablecoin sector.
Countries like South Korea, Thailand, and the Philippines are also advancing frameworks for fiat-pegged tokens, while regional giants like JD.com and Ant Group are exploring stablecoin issuance in Asia. JPMorgan CEO Jamie Dimon has acknowledged that stablecoins serve real customer demand, and the firm has partnered with Coinbase, allowing Chase users to convert reward points into crypto.
In light of these developments, the anticipated rise in USDT dominance could lead to a short-term altcoin correction similar to April 2025. However, once USDT dominance peaks, sidelined liquidity could rotate back into altcoins, opening the door for a strong rebound. Thus, the altcoin market could experience turbulence in the coming weeks, but a potential rebound is possible after the peak of USDT dominance.
- Investors' preference for stablecoins, notably USDT, over riskier assets like altcoins can trigger a correction in the altcoin market.
- In the crypto ecosystem, USDT functions not only as a store of value but also as a crucial liquidity and transactional tool.
- Ethena's USDe has added significant supply to the stablecoin sector, indicating a high level of support for these digital assets.
- Driven by utility in real-time transfers, cross-border remittances, and digital dollar substitution, stablecoins like USDT are expected to continue gaining demand.
- The altcoin market might face short-term turbulence due to potential increases in USDT dominance, but a strong rebound is possible after USDT dominance peaks.
