A view that Ethereum (ETH) may not be able to hold the No. 2 spot in cryptocurrency market capitalization in 2026 is spreading quickly in betting markets. Cointelegraph reported on March 29 that Polymarket traders bet the probability of Ethereum being pushed out of second place at more than 59 percent. That is a sharp jump from 17 percent at the start of the year.

The core of the move is not about overtaking bitcoin (BTC). The assessment is that Ethereum’s long-held No. 2 position has become relatively weaker as the stablecoin economy, including Tether (USDT) and USD Coin (USDC), has expanded. Some in the market say, "Ethereum’s No. 2 position is fading not because it is getting closer to bitcoin but because the stablecoin economy is booming."

By market-cap growth over the past 5 years, Ethereum has lagged major rival assets. Based on TradingView, Ethereum’s market capitalization rose about 11.75 percent to roughly $240 billion. By contrast, USDT, cited as the current No. 3 by market cap, grew 622.50 percent over the same period, taking its market value above $184 billion. That means Ethereum has fallen far behind rivals for second place over the past 5 years, especially Tether’s stablecoin USDT. XRP and USDC also posted higher growth rates than Ethereum.

The gap stems from differences in how the assets grow. Because a rise in the token price is the key driver of Ethereum’s market-cap expansion, it has not been easy to sustain gains as macroeconomic factors have pressured markets in 2026. Ethereum’s price rise also lost momentum as U.S. tariff issues, the U.S.-Israel versus Iran war, and weaker expectations for interest-rate cuts by the U.S. Federal Reserve overlapped.

Institutional demand also appears to have weakened. Assets under management in spot Ethereum exchange-traded funds fell about 65 percent to $11.76 billion in March from $31.86 billion in October last year. That suggests institutional preference for Ethereum has weakened in recent months.

Tether, by contrast, is structured to benefit from defensive inflows as market uncertainty increases. Growth can stand out as investors move from volatile assets to stablecoins with high stability, liquidity and usability. The overall stablecoin market expanded from about $5 billion in 2020 to $310 billion now, with Tether accounting for 58 percent.

On the price side, technical risk was also mentioned. An analysis says Ethereum is trading within a pattern that appears to be a "bear flag," and that the likelihood of further downside rises if it clearly breaks below the lower trend line. If this persists, some also raise the possibility that around $1,250 could become a measured target level around June.

Ultimately, the market’s focus is shifting from how much higher Ethereum can rise to whether stablecoin-centered flows can reshape the market-cap order. Observers increasingly argue that the center of gravity in crypto markets is moving again, as Ethereum’s place once seen as a "firm No. 2" could now be shaken not only by token prices but also by the nature of capital flows and changes in market structure.