USDT Dominance Near 4.8% Sparks Altcoin Correction Fears

The growing dominance of Tether (USDT) has raised concerns about a potential short-term correction in altcoin prices, with some analysts drawing parallels to market turbulence seen in April 2025. USDT’s market share is expected to rise to levels near 4.7%-4.8% in the coming weeks, a threshold historically linked to a flight to safety and a withdrawal of liquidity from riskier crypto assets such as altcoins [1]. According to Web3Niels, co-founder of Ted Labs and partner at Bybit, this development could trigger a sharp downturn in altcoin performance but may also present a “golden buying opportunity” once the dominance peaks and liquidity returns to the sector [1].

The rise in USDT’s influence is part of a broader shift in stablecoin dynamics, with yield-bearing stablecoins gaining traction. Ethena’s USDe has added $2.7 billion in supply since the GENIUS event on July 18, surpassing USDT’s $2.47 billion growth during the same period [1]. This trend highlights growing investor interest in stablecoins that generate returns, potentially reshaping crypto liquidity flows as capital shifts away from traditional options like Circle’s USDC, which experienced a $797 million decline [1].

While USDT’s dominance may temporarily suppress risk-on sentiment, the overall stablecoin narrative is gaining strength. JPMorgan CEO Jamie Dimon recently emphasized the real-world demand for stablecoins, distinguishing them from Bitcoin. His comments followed the bank’s partnership with Coinbase to allow Chase users to convert reward points into crypto [1]. Meanwhile, the U.S. House’s passage of the GENIUS Act has spurred similar regulatory developments across Asia, with South Korea, Thailand, and the Philippines advancing frameworks for fiat-pegged tokens [1]. Major firms like JD.com and Ant Group are also exploring stablecoin issuance, signaling a broader institutional embrace of the asset class.

As the crypto market navigates these shifts, the coming weeks may see increased volatility. However, historical patterns suggest that a reversal below the 4.8% USDT dominance threshold could mark the beginning of a strong altcoin resurgence by late Q3 2025 [1]. The interplay between stablecoin growth and altcoin performance remains a key factor in shaping the next phase of the crypto market.

Source: [1] Altcoins at risk as USDT dominance nears 4.8% – Why this is good news (https://ambcrypto.com/altcoins-at-risk-as-usdt-dominance-nears-4-8-why-this-is-good-news/)