USDT dominance is forecasted to continue rising, potentially causing a severe adjustment for Altcoins in the short term; however, the demand for Stablecoin and the development of Yield assets like USDe from Ethena are providing a solid foundation for Altcoin recovery.
Rising USDT dominance usually means capital is flowing into safe assets, reducing Altcoin liquidity. However, when capital returns, the market may witness a strong rally in Altcoins due to the push from Yield Stablecoins.
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USDT dominance is expected to continue increasing, posing a risk of short-term adjustments for Altcoins, repeating the scenario of April 2025.
Yield Stablecoins like USDe from Ethena are leading in supply growth, reflecting the trend of capital flow shift among investors.
Large organizations and regions such as JPMorgan, JD.com, and Asia are promoting the application and governance of Stablecoin, strengthening their position in the digital asset market.
What is USDT dominance and how does it affect the Altcoin market?
USDT dominance reflects the market capitalization of Tether (USDT) compared to the entire cryptocurrency market and is often an indicator of risk-averse sentiment, directly affecting liquidity and the price of Altcoins.
When USDT dominance rises, investors tend to swap Altcoins for Stablecoin to preserve capital, causing capital to exit riskier assets. This trend previously led to significant Altcoin adjustments in April 2025, according to market experts' analyses and historical data.
“When Stablecoin dominance surges, it often signals that investors want to be defensive, with capital flowing away from Altcoins in the short term. However, this very phase opens up buying opportunities for patient investors.”
Web3Niels, Co-founder of Ted Labs, Partner at Bybit, analysis on X.com, August 2025
Data shows that instances when USDT dominance exceeds 4.8% are often accompanied by significant adjustments in many major Altcoins. However, after peaking and starting to cool down, the 'reserved' capital in Stablecoin tends to flow back to the Altcoin market, leading to a strong recovery.
Why are experts warning of short-term adjustments for Altcoins as USDT dominance rises?
Experts and analysts like Web3Niels predict that USDT dominance could rise to 4.7%–4.8% in the coming weeks, raising concerns about a strong adjustment for Altcoins, similar to the scenario that occurred at the beginning of Q2, 2025.
This is a repeating cycle based on market sentiment: when risk is high, investors prioritize holding Stablecoin, reduce positions in Altcoins, and liquidity in the market declines. In reality, cycles of increasing USDT dominance rarely last long, and each peak becomes a 'trough' for Yield capital to return to Altcoins.
“The market still needs 'cooldown' phases, during which Stablecoin is favored as a temporary value storage, before a new Altcoin price surge erupts.”
Artemis report on Stablecoin capital flow trends, July 2025
Proactive investors monitoring USDT dominance trends often capitalize on 'golden opportunities' when the market shifts from a defensive to an offensive stance, especially with leading Altcoins.
How to identify the recovery timing of Altcoins when USDT dominance reverses?
When USDT dominance remains high and begins to drop below 4.8%, this could signal a strong capital rotation back to Altcoins, especially towards the end of Q3, 2025.
According to Web3Niels, USDT dominance reversals are linked to the recovery of Altcoin value as 'reserved' capital in Stablecoin seeks new yields, creating a widespread price surge.
History shows that USDT dominance reversals often lead to prolonged Altcoin waves, with price increases ranging from tens to hundreds of % in various significant projects, depending on quality and industry trends.
The role of Yield Stablecoin and the growth trend of new supply
Not only USDT, but the emergence and exceptional growth of Yield Stablecoins like ENA USDe are reshaping the strength of capital flows in the digital asset market.
According to a report from Artemis, since the GENIUS event on July 18, 2025, USDe from Ethena has added an additional $2.7 billion in supply - surpassing the $2.47 billion growth of USDT during the same period, demonstrating investor confidence in Stablecoin assets with superior yield potential.
“Investors are increasingly seeking Stablecoin not only as a price-pegged asset but also to create additional value through Yield forms, generating a wave of capital transformation across the market.”
Report analyzing Stablecoin trends, Artemis, July 2025
In contrast to ENA USDe, traditional Stablecoins like USDC from Circle recorded a decrease of $797 million in the same period, indicating that capital has prioritized products that offer actual yields.
Stablecoin Supply Growth (after GENIUS 18/7/2025) Ethena USDe $2.7 billion Tether USDT $2.47 billion Circle USDC -$797 million
In terms of supply growth rates, Yield Stablecoins are expected to continue attracting new capital in the near future, especially as the global interest rate environment stabilizes and investors become more cautious of Altcoin price volatility.
International developments: Stablecoin from the perspective of large financial organizations and regional trends
Not only individual investors, but large organizations globally are also clearly expressing their views on the role of Stablecoin in the digital financial ecosystem.
Jamie Dimon, CEO of JPMorgan, publicly asserts that Stablecoin has practical value, contrary to cautious views on Bitcoin. Just in July 2025, JPMorgan partnered with Coinbase to allow Chase bank customers to convert reward points into cryptocurrency, promoting the application of Stablecoin for mainstream users.
“I believe in Stablecoin, believe in Blockchain, even though I am not a believer in Bitcoin. But for clients, I have no right to stop them from doing anything with their assets.”
Jamie Dimon, CEO of JPMorgan, interviewed by CNBC, July 2025
At the same time, the US Congress passed the GENIUS Act, inspiring a range of Asian countries to promote regulatory frameworks for Stablecoin. South Korea, Thailand, and the Philippines are leading in establishing governance regulations for price-pegged Tokens, while corporations like JD.com and Ant Group are actively researching the issuance of their own Stablecoins for cross-border e-commerce.
These moves forecast strong growth in international demand for Stablecoin, leading to an increase in influence and the level of 'capital rotation' on a global scale.
Temporary stability and long-term volatility: How should investors actively strategize?
The increase in Stablecoin dominance often signals a defensive market phase, with little significant volatility. This is when investors consider reducing leverage, managing risks, and temporarily shifting part of their assets into Stablecoin to safeguard profits.
However, when the market determines the peak area of Stablecoin dominance, many capital flows are ready to rotate back to riskier assets like Altcoins. This is clearly reflected in the data of each previous bull wave: after each 'shelter' in Stablecoin, the market explodes with many significant Yield opportunities, especially in leading Altcoins of technological trends or practical applications.
The ability to flexibly rotate capital between Stablecoin and Altcoin has become a popular strategic trend among experienced investors in the cryptocurrency market.
Comparing the advantages and limitations of various Stablecoin flows in the current market
Amid the wave of preference for Yield Stablecoins, investors need to clearly understand the characteristics, advantages, and disadvantages of each type of Stablecoin for effective capital allocation.
Type of Stablecoin Advantages Disadvantages USDT (Tether) High liquidity, widely accepted, easy to convert Affected when dominant too large, few Yield functions USDC (Circle) Strictly regulated, transparent collateral assets No Yield rate, supply tends to shrink when capital flows to Yield products ENA USDe (Ethena) Has Yield products, strong supply growth, attracts new capital New model risks, requires time to verify long-term stability
The high yields and rapid growth potential of Yield Stablecoins are notable trends, but they still require risk management and close monitoring of new oversight and regulations from major countries and global financial organizations.
Legal, technological, and market factors drive the position of Stablecoin in digital finance
The move to pass the GENIUS Act in the United States and strengthen regulatory frameworks in Asia is bolstering market confidence in the sustainable future of Stablecoin. Notably, the participation of large tech corporations and international banks enhances competitive standing, expanding the experience and reach of Stablecoin to millions of new users.
“Stablecoin is gradually becoming a safe and flexible intermediary option, expanding seamless connectivity between traditional financial markets and the digital economy.”
Insights from the Blockchain strategy team at Ant Group, 2025 report
Innovating models like Yield Stablecoins, integrating multi-chain Blockchain technology and Interoperability also helps the cryptocurrency market remain resilient against cyclical fluctuations while optimizing global capital flow.
Predictions and optimal strategies with the temporary stability of Stablecoin dominance
Analysts expect Stablecoin dominance to continue playing a crucial role as an important indicator for market fluctuations, especially during transition phases between defensive sentiment and new growth cycles for Altcoins by the end of 2025.
With momentum from international regulatory frameworks, new Yield products, and the engagement of large organizations, Stablecoin will continue to be a key tool for investors to flexibly allocate their portfolios and wisely leverage short- and long-term Yield opportunities.
The strategy of capital rotation between Yield Stablecoins and Altcoins leads the technological trend, combining risk governance – optimizing profits amid the continuous volatility of the global digital asset market.
Frequently Asked Questions (FAQ) about USDT dominance, Yield Stablecoin, and their impact on Altcoin
What impact does high USDT dominance have on Altcoin prices?
When USDT dominance rises, capital flow into Stablecoin reduces Altcoin liquidity, leading to short-term price adjustment risks for Altcoins.
How can we know when capital flows back to Altcoins?
The point at which USDT dominance peaks and begins to decline is often a signal for capital flow from Stablecoin back to Altcoins, opening up strong recovery opportunities in the Altcoin market.
Why is USDe (Ethena) receiving much attention lately?
USDe (Ethena) is a Yield Stablecoin, experiencing the strongest supply growth in the market after the GENIUS event, attracting attention due to its appealing yield to institutional and individual investors.
How do USDT, USDC, and USDe differ in terms of advantages and disadvantages?
USDT has high liquidity but few Yield functions; USDC is transparent about collateral assets but has stagnated supply growth; USDe offers high yields, but new model risks need time for verification.
What role does Stablecoin dominance play in investment strategy?
Stablecoin dominance is an indicator of the market's defensive/offensive sentiment, helping investors choose the optimal time to rotate capital between Stablecoin and Altcoin.
Who are the large organizations promoting global Stablecoin application?
JPMorgan, JD.com, Ant Group, along with Asian banks and corporations, are leading the application of Stablecoin and promoting legal and technological development for this sector.
How long does USDT dominance take before starting to reverse?
Historically, USDT dominance often increases sharply for several weeks before reversing, opening up recovery waves for Altcoins when surpassing the threshold of 4.8% and beginning to decline.
Source: https://tintucbitcoin.com/usdt-tang-altcoin-gap-rui-ro/
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