Ethereum could lose its second place in the crypto market in 2026

Long considered the unshakable runner-up to Bitcoin, Ethereum’s position is now threatened by an unexpected adversary: Tether. On Polymarket, bets on an “ETH flipping” in 2026 have jumped from 17% to over 59% in a few weeks. A trend that raises questions.

Tether is nibbling away at Ethereum’s turf, not Bitcoin’s

The scenario unfolding in 2026 is as surprising as it is instructive. It is not Bitcoin that threatens Ethereum’s second place, but Tether. According to Polymarket data, over 59% of bettors anticipate this shift. At the beginning of the year, this probability did not exceed 17%.

Over the past five years, ETH’s market capitalization has increased by only 11.75%, reaching around 240 billion dollars. Meanwhile, USDT experienced a growth of 622.5%, with a capitalization now close to 184 billion dollars. XRP and USDC also outperformed Ethereum during this period.

The logic is simple: Ethereum needs risk appetite to see its price rise. Tether, on the other hand, thrives exactly in the opposite context, when investors seek safety. 

During periods of macroeconomic turmoil, U.S. tariffs, geopolitical tensions, fading hopes of Fed rate cuts, capital flees volatility and seeks refuge in stablecoins.

The total stablecoin market has now exceeded 310 billion dollars, compared to only 5 billion in 2020. Tether captures 58% of this. This liquidity on hold represents capital positioned on the sidelines, ready to re-enter when conditions improve. Meanwhile, they mechanically inflate Tether’s capitalization.

Institutional disinterest further worsens the picture for Ethereum. The ETH spot ETFs in the United States have seen their assets under management shrink by about 65%, from 31.86 billion dollars in October 2024 to 11.76 billion dollars in March 2026. A sharp decline contrasting with the dynamism of Bitcoin ETFs.

An ETH under technical and fundamental pressure

From a technical analysis perspective, the picture is no more reassuring. The ETH price currently appears to be forming a “bear flag” pattern on the tri-daily chart.

If the break below the lower trend line is confirmed, a bearish target around 1,250 dollars is conceivable by June 2026. In other words, a new significant down leg cannot be ruled out.

Additionally, there is a worrying structural fragility: the leverage ratio on Ethereum has recently reached a record high, indicating speculation weighs as heavily as available reserves on exchanges. In this context, the slightest bad news can trigger liquidation cascades.

Yet, Ethereum is not without assets. Whales have accumulated nearly 466,500 ETH during the last pullback, and activity on Ethereum L1 shows signs of recovery, driven notably by stablecoins and tokenized assets. The network is also preparing its post-quantum resistance for 2029, a fundamental project for the long term.

In short, the battle for second place is not between ETH and BTC, but between two radically different investment philosophies. As long as risk aversion dominates the markets, Tether will continue to widen the gap. For Ethereum, the real turnaround will depend less on its technological fundamentals than on the return of a global appetite for risky assets.