A key shift is taking shape in the market, and it is one traders should keep a close eye on.
On a macro level, the stablecoin market is currently at one of its lowest levels since the 2022 bear market. The total supply of Tether (USDT) has fallen by almost $15 billion from its peak of $310 billion in mid-May. This indicated that liquidity has been flowing out of the crypto market, which is why demand has been pretty low even though Bitcoin is now trading almost 30% off its $126K high.
As the largest stablecoin hub, Ethereum has taken a significant hit too.
According to DeFiLlama, the total amount of stablecoins on Ethereum fell by over $20 billion. This was compounded by Tether as in the last 30 days alone, the total supply of USDT on Ethereum fell by nearly 9% to just over $66 billion. The key takeaway, however, may be Tron’s USDT supply.
As shown in the chart above, USDT supply on the Tron blockchain was down by only just over 1% at press time. This was much lower than the 9% decrease seen on Ethereum. This hinted at a clear divergence in stablecoin liquidity between the two networks.
With Ethereum seeing heavier USDT outflows, Tron’s share of total USDT supply climbed above 52%, reinforcing its position as the dominant network for USDT liquidity.
Interestingly, Tron founder Justin Sun also pointed out this trend in a recent X post, highlighting data from Token Terminal. In the past 12 months, TRON recorded a $16.1 billion hike in stablecoin supply, the highest among 45 tracked blockchains. HyperEVM came second. Arc also had an increase of $1.3 billion while Arbitrum decreased by $4.3 billion. On the contrary, Ethereum saw a more significant $30.6 billion decline.
In short, Tron’s [TRX] stablecoin dominance may be taking down Ethereum. It is also making inroads into other major Layer 1 networks. According to AMBCrypto, with increasing liquidity advantages, TRX is an altcoin to watch when the market moves back into a risk-on environment.
Tron’s stablecoin inflows challenge Ethereum as TRX/ETH gains 23%
The real impact of this divergence becomes clearer when looking at on-chain activity.
Interestingly, data from the Tron network also seemed to confirm the stablecoins trend. Within a 24-hour period, Tron processed 12,990,075 transactions. This is the highest daily total for the past 7 days, averaging at around 150 transactions per second (TPS). This suggested that there may be consistent demand on the network, with the increase in stablecoins on Tron being due to real demand.
The result? The TRX/ETH ratio has risen by over 23% so far in Q4 and was only 15% away from making up all of its Q3 losses. On top of that, with stablecoin liquidity and on-chain activity between the two projects increasing, this trend may be accelerating.
If this continues, a break above the 0.002-resistance level could become more likely, opening the door for further TRX outperformance against ETH.
Taken together, with increasing stablecoin dominance, high volume, and the 23% rally in the TRX/ETH ratio, 0.002 is a key level. If it breaks through it could be a testement to TRX’s strength, while a failure to clear resistance may leave the pair trading within its current range.
As it stands, the combination of stablecoin inflows and growing network activity means that TRON is well-positioned to outperform Ethereum [ETH] this quarter.
Final Summary
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Tron gained significant stablecoin share as Ethereum saw heavier outflows and weaker on-chain activity.
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At press time, TRX/ETH was up 23% in Q4, with 0.002 as the next key resistance level.
