Why Is Tether's Market Cap Potentially Overtaking Ethereum? Analysts Warn of a Structural Turning Point

On February 13, 2026, Gate real-time market data shows that Ethereum (ETH) is priced at $1,950.43, corresponding to a market capitalization of approximately $236 billion; meanwhile, the circulating supply of USDT has surpassed 183 billion tokens, with a total market cap also crossing the $183 billion mark.

The gap between these two figures has rapidly narrowed from over $120 billion at the beginning of 2026 to the current $53 billion. In a report released on February 12, Bloomberg Intelligence senior commodities strategist Mike McGlone issued a warning nearing reality: if ETH falls below the key support level of $1,500, Tether’s market cap will officially surpass Ethereum, making it the second-largest crypto asset globally.

This is no longer just a theoretical “hypothesis.” Increasingly, institutional traders on mainstream platforms like Gate are adjusting their positions in anticipation of this “structural flip.”

From “Technical Breakthrough” to “Market Cap Overlap”: Where Is the Critical Point of Reversal?

McGlone’s assessment is based on two synchronized trends: the persistent decline of Ethereum’s price center and the rigid growth of USDT issuance.

From a technical perspective, Ethereum officially broke below the $2,500 critical support level—maintained for nearly two years since 2024—at the end of January 2026. Gate’s charts show that ETH’s current price is not only well below the 100-day moving average ($2,966) but also exhibits a clear “lower lows” structure on the weekly chart. McGlone points out that a noticeable gap has appeared on the chart, with the next technical target directly at $1,500.

Quantitative calculations are even more straightforward. According to Gate data on February 13, ETH’s current market cap is $236 billion, while USDT’s is $141 billion. Assuming USDT’s market cap remains unchanged in the near term (in reality, Tether continues to issue at a rate of about 3%–5% per month), ETH would only need to drop another 18% to around $1,600 for their market caps to fully overlap; if ETH hits $1,500, USDT will have achieved a clear “flippening” advantage.

Stablecoin “Counter-Cyclical” Expansion: Practicality Over Speculation

What unsettles market participants even more is that Tether’s growth is in stark contrast to the decline of risk assets in crypto.

From January 2025 to January 2026, the total crypto market cap evaporated over $1 trillion, with major assets like Bitcoin and Ethereum retracing 30%–50%. Meanwhile, the stablecoin sector’s total market cap surged by 50%, breaking through $307 billion; USDT alone saw its circulating supply nearly triple, reaching a historic peak of $187 billion.

This divergence reveals deep structural changes in the market. Tether CEO Paolo Ardoino recently disclosed key data: currently, about 60% of USDT is used in scenarios unrelated to secondary market trading, instead penetrating sectors like commodity settlement, cross-border payments, and payroll. Stablecoins are evolving from “trading tools” into “digital dollar infrastructure.”

Mike McGlone describes this trend as “Tether Flippening Everything.” In his framework, the rise in USDT’s market cap is not driven by market euphoria—in fact, it reflects the contraction of speculative assets and the pricing correction of practical assets. While Bitcoin and Ethereum remain highly tied to global liquidity cycles, USDT has carved out an independent trajectory thanks to its dollar exposure and network effects.

Greater Imagination Space: If Bitcoin Falls to $10,000

McGlone’s conclusion does not stop at “second.” He further suggests in his report that if Bitcoin’s price drops to around $10,000, Tether could eventually surpass Bitcoin and become the largest crypto asset by market cap.

This is not a short-term prediction but a structural scenario analysis. Bitcoin’s current market cap still stands at $1.3 trillion, far exceeding USDT’s $141 billion. However, if a severe global recession occurs, risking a systemic revaluation of risk assets, and stablecoins continue to absorb capital as “safe-haven cash flow assets,” their market caps could intersect.

Standard Chartered recently lowered its target prices for Bitcoin and Ethereum, projecting that in the coming months, both assets will trade around $50,000 and $1,400 respectively. If this scenario materializes, USDT will almost certainly complete its “market cap flip” before Ethereum and significantly close the gap with Bitcoin.

Structural Risks Not Yet Priced Into the Market

In Gate’s trading community, discussions about the “flippening” are heating up rapidly. Many users focus on short-term arbitrage opportunities, but the real concern lies in the underlying structural risks exposed by this event:

1. Narrative Shift — The long-held consensus that “Ethereum will become the ultimate digital asset” is being challenged. If a nearly non-volatile dollar token surpasses the leading smart contract blockchain in market cap, the market will need to redefine the boundaries of “store of value” and “medium of exchange.”
2. Liquidity “Siphoning” — USDT’s continuous expansion comes at a cost. It is absorbing a large portion of on-chain liquidity that would otherwise flow into volatile assets like ETH and BTC, creating a de facto tightening effect that further suppresses prices.
3. Regulatory Re-focus — Once USDT becomes the second-largest crypto asset by market cap, regulatory scrutiny on Tether’s reserves and issuance mechanisms will reach unprecedented levels. This is both a risk and a necessary step toward industry compliance.

Summary

The crypto market is accustomed to associating the “flippening” with Ethereum surpassing Bitcoin. But as of February 2026, what is truly approaching a historic milestone is a market cap reversal from speculative assets to non-speculative assets.

On the Gate platform, ETH is currently priced at $1,950.43, with a 23% buffer before reaching McGlone’s defined flip threshold of $1,500. However, considering Tether’s ongoing weekly issuance of hundreds of millions of dollars, this safety margin is far less solid than it appears.

Whether you consider USDT a “true crypto asset” or not, the market structure itself is making a choice.

When stablecoins grow large enough to rival the leading blockchain platforms, we may need to reconsider the most fundamental question: in a crypto ecosystem increasingly reliant on dollar stablecoins for valuation and settlement, what is truly the “native asset”?