USDT Market Cap Soars To Record With Ethereum Crossing Tron as Main Hub

Tether, crypto’s largest stablecoin by market capitalization, is reaching new highs, and most of its growth is happening on Ethereum.

USDT’s market cap surged by 14% in the past month to a record $137 billion, according to CoinGecko. The USDT market cap on Ethereum expanded by 31% to $71.9 billion, the most out of eight major chains it is issued on, and surpassing USDT on Tron for the first time since July 2022, according to data compiled by The Block.

The secret to Ethereum dominance? Surging investor demand for crypto ETFs. Tron’s lack of investment products is causing the chain to lag as the main USDT hub this cycle as rapidly growing crypto interest has resulted in massive inflows into ETFs.

“The recent jump in Tether's (USDT) market cap on Ethereum reflects a few critical dynamics in the crypto market. First, Ethereum’s role as the second-largest asset is drawing significant inflows amid broader repricing of digital assets,” said Coinstash co-founder Mena Theodorou.

“With Bitcoin’s price soaring past the psychological $100K barrier, its perceived risk has diminished, attracting fresh capital into the market. The knock-on effect of this is that investors look to diversify into other major assets like Ethereum.”

During a fireside chat at TheBlock’s Emergence conference in Prague, Paolo Ardoino said Tether has benefitted from liquidity injection, as most of it is converted into stablecoin.

ETH ETFs

Tether minted one billion more USDT tokens on Ethereum on Dec. 5.

Ethereum had been the primary blockchain for USDT token issuance since at least 2018 until April of 2021, when Tron overtook it as the chain where most USDT was issued. Tron and Ethereum were neck and neck as the leading chain for USDT through 2021 and the first half of 2022. In July 2022 Tron took the clear lead, until Nov. 15, when Ethereum surpassed it.

Ethereum's fortunes started to change when U.S. regulators approved Bitcoin ETFs on Jan. 10, spurring over $1 billion worth of inflows into the asset class. Ethereum ETFs weren’t approved until July and played catch-up to Bitcoin ETFs until last week, when they started to record higher relative inflows.

Ethereum ETFs had an all-time high daily inflow volume of $435 million on Dec. 5. The funds had a nine-day streak of positive inflows, surpassing $1 billion in cumulative net inflows.

“Ethereum’s dominance in market share reflects the stronger institutional demand overnight. Tailwinds of a pro-crypto administration taking the reign's in the US are still blowing, and with the recent appointment of Paul Atkins to run the S.E.C., the landscape for digital assets has never looked so prosperous,” said Swyftx's Senior Market Analyst, Pav Hundal.