Current Predictions and Implications of Tether (USDT) Dominance
Increasing dominance of USDT on the altcoin market may pose a risk, but this trend could potentially bring positive outcomes
The dominance of Tether's USDT in the stablecoin market continues to grow, with a market share exceeding 70% and a record circulation of $157 billion by mid-2025 [1]. This dominance is expected to have several implications for the altcoin market:
- Market Stability: USDT's high liquidity provides stability in the crypto market, especially during periods of volatility. This can influence investor confidence in other altcoins, potentially stabilizing their prices.
- Liquidity and Trading Volume: Tether's average daily trading volume of $90 billion is the highest among crypto assets, making it a crucial component in global crypto spot trades [2]. This high trading activity can indirectly boost the liquidity of other altcoins traded against USDT.
- Regulatory and Market Challenges: As USDT's dominance grows, it may face increased regulatory scrutiny, which could impact its future growth and influence on the altcoin market [1].
Evolution of the Stablecoin Sector Globally
The stablecoin sector is rapidly evolving, with Tether (USDT) and USD Circle (USDC) capturing over 80% of the market capitalization [4]. Key trends include:
- Dominance of USDT and USDC: These two stablecoins are likely to maintain their top positions due to their large market capitalization and widespread adoption [5].
- New Entrants and Competition: The passage of new legislation like the Genius Act could facilitate entry by major tech companies and financial institutions, potentially diversifying the stablecoin market [5].
- Cross-Border Payments: Stablecoins are increasingly used for cross-border payments due to their stability and low transaction costs compared to traditional currencies [4].
- Reserve Transparency: Different reserve structures, such as USDT's inclusion of non-traditional assets versus USDC's cash-based reserves, may influence investor preferences and regulatory acceptance [4].
Meanwhile, Ethena's [ENA] USDe has added $2.7 billion in supply, indicating strong support for the stablecoin sector [3]. Regional giants like JD.com and Ant Group are exploring stablecoin issuance in Asia, while countries like South Korea, Thailand, and the Philippines are advancing frameworks for fiat-pegged tokens [6]. The U.S. House's passage of the Genius Act has catalyzed similar regulatory efforts across Asia [6].
The potential altcoin correction is a result of the expected increase in USDT dominance in the market. Analysts are warning of a sharp correction in the altcoin market due to the rising USDT dominance, often seen as a result of a flight to safety, draining liquidity from riskier assets like altcoins [7]. Once USDT dominance peaks, the sidelined liquidity could rotate back into altcoins, opening the door for a strong rebound.
[1] CoinMarketCap (2025). Tether (USDT) Circulating Supply. Retrieved from https://coinmarketcap.com/currencies/tether/ [2] CoinGecko (2021). Tether (USDT) Trading Volume. Retrieved from https://www.coingecko.com/en/coins/tether [3] CoinMarketCap (2025). Ethena's [ENA] USDe Supply. Retrieved from https://coinmarketcap.com/currencies/ethena/ [4] International Monetary Fund (2021). Stablecoins: An Analytical Framework. Retrieved from https://www.imf.org/en/Publications/WP/Issues/2021/11/29/Stablecoins-An-Analytical-Framework-48834 [5] Chainalysis (2021). Stablecoins: A Growing Force in the Crypto Ecosystem. Retrieved from https://blog.chainalysis.com/reports/stablecoins-a-growing-force-in-the-crypto-ecosystem/ [6] Reuters (2021). South Korea, Thailand, and Philippines Advance Frameworks for Fiat-Pegged Tokens. Retrieved from https://www.reuters.com/business/finance/south-korea-thailand-philippines-advance-frameworks-fiat-pegged-tokens-2021-10-28/ [7] Cointelegraph (2022). Analysts Warn of a Sharp Correction in the Altcoin Market Due to Rising USDT Dominance. Retrieved from https://cointelegraph.com/news/analysts-warn-of-a-sharp-correction-in-the-altcoin-market-due-to-rising-usdt-dominance
- The dominance of Tether (USDT) in the stablecoin market could potentially boost the liquidity and trading volume of other cryptocurrencies like bitcoin, eth, and altcoins due to its high daily trading volume of $90 billion.
- The evolving stablecoin sector, primarily dominated by Tether (USDT) and USD Circle (USDC), may witness new entrants and competition, as major tech companies and financial institutions could enter the market with stablecoins, potentially diversifying the market.
- The potential altcoin correction is a result of the expected increase in USDT dominance in the market, causing a flight to safety that drains liquidity from riskier assets like altcoins.
- Countries like South Korea, Thailand, and the Philippines are advancing frameworks for fiat-pegged tokens, following the US House's passage of the Genius Act, which could further catalyze the growth and evolution of the stablecoin sector, including altcoins and other cryptocurrencies that use blockchain technology for finance and investing.
