USDT Dominance Decline Signals Shift to Bitcoin and Altcoins

The dominance of Tether (USDT) in the cryptocurrency market is showing signs of decline, a trend that historically indicates capital rotation into Bitcoin and altcoins. This shift is closely watched by investors as it reflects changing risk appetite and liquidity dynamics in the crypto space. As of April 2025, Tether’s market capitalization has reached a record high of $145.6 billion, with $1.6 billion in new USDT minted during the month alone. This expanding supply suggests increased liquidity, which could further fuel the ongoing rotation into other digital assets. The decline in USDT dominance often precedes bullish movements in Bitcoin and altcoins, making this a critical development for market participants to monitor.

USDT Dominance Decline Signals Shift to Bitcoin and Altcoins

Tether’s market dominance (USDT.D) is showing signs of weakening, a trend historically associated with capital rotation into Bitcoin and altcoins. The metric, which measures USDT’s share of total crypto market capitalization, serves as a liquidity barometer for risk appetite.

Tether’s market cap reached a record $145.6 billion in April 2025, with $1.6 billion new USDT minted during the month alone. This expanding supply creates dry powder for crypto purchases when investors move out of stablecoins.

The inverse correlation between USDT.D and Bitcoin’s price action suggests growing bullish sentiment. Market participants appear to be deploying stablecoin reserves into crypto assets, with the dominance drop preceding previous altcoin rallies.

Ethena’s USDe Growth Fuels Tether’s USDT Creation, Founder Claims

Ethena founder Guy Young asserts that the expansion of USDe, the protocol’s synthetic dollar, directly stimulates demand for Tether’s USDT. The correlation stems from Ethena’s hedging mechanism, where every dollar of USDe issuance requires approximately $0.70 in USDT to back perpetual futures positions.

"We’re effectively creating parallel demand for Tether," Young explained, citing Plasma Foundation data showing 70% of perpetual swap volumes are USDT-denominated. Unlike conventional stablecoins relying on asset reserves, USDe maintains its peg through dynamic derivatives strategies—a design choice now demonstrating unexpected market interdependencies.

Tether Dominates Ethereum Gas Usage While Solana Leads in DEX Activity

Tether’s USDT smart contract has emerged as the top gas consumer across the Ethereum ecosystem, including Layer 1, Layer 2 networks, and EVM-compatible chains. The stablecoin’s outsized role in blockchain transactions underscores its pivotal position in crypto’s financial infrastructure.

Conduit Research’s year-long analysis reveals Ethereum remains the primary hub for Tether activity, with its contract consistently ranking among the most gas-intensive operations. Gas expenditure continues to serve as a reliable proxy for economic activity across major chains.

Solana charts a different course, with Raydium’s decentralized exchange driving the majority of network activity. The chain’s gas consumption patterns highlight its growing specialization in swap transactions and decentralized trading.