Analyst warns Bitcoin's dominance is under threat from a new rival

Core Viewpoint - The rise of stablecoins, particularly Tether (USDT), is seen as a significant trend in the cryptocurrency market, potentially surpassing Bitcoin in market capitalization as risk assets weaken [1][4]. Group 1: Stablecoin Market Dynamics - Tether's USDT stablecoin has a market cap of $184.6 billion, making it the largest stablecoin, with the total stablecoin market cap at $307.1 billion [2]. - The second-largest stablecoin, Circle's USDC, has a market cap of $73.2 billion, indicating Tether's dominance in the market [2]. - The growth of stablecoin market caps, especially during periods of declining risk assets, suggests a shift towards defensive investment behavior [2]. Group 2: Market Implications for Ethereum and Bitcoin - Ethereum (ETH) has recently experienced a technical breakdown, losing a key support level of $2,500 and now targeting $1,500 as the next support [3]. - If ETH continues to decline while USDT supply expands, Tether could surpass Ethereum in market cap, highlighting a preference for capital preservation [3]. - Bitcoin has seen a significant decline of over 44% from its peak of $124,000, currently hovering around $68,741, which could lead to Tether surpassing Bitcoin if the trend continues [4]. Group 3: Market Sentiment and Future Outlook - The scenario presented indicates a deep bear market characterized by risk-off sentiment, with sustained demand for dollar-backed liquidity and a preference for stability over volatility among investors [5].