Is ‘liquidity’ the catalyst for Ethereum to lead the next risk-on rally?
According to data from DeFiLlama, ETH has the largest stablecoin liquidity base by far on L1s, accounting for 50% of the $300 billion market; therefore, ETH has a deep liquidity war chest to rotate into risk assets when the market turns risk-on.
More importantly, liquidity rotation seems to have already started.
According to Token Terminal, Ethereum processed over 203 million transactions in Q2, up 68.4% from Q2 2025. The result? ETH has emerged as one of the top performers among large caps, gaining 52% so far in Q3.
In essence, the strong network activity seen in Q2 is now translating into price action.
ETH’s rally has come alongside a recovery in the stablecoin market.
From a technical perspective, the stablecoin market cap turned positive in August after three consecutive months of net outflows and has remained positive so far in September.
This indicates that the market liquidity is on the path of recovery. Notably, this is where Ethereum’s Q2 setup becomes interesting.
With the network activity already picking up, renewed liquidity could potentially add another layer of bullish momentum to ETH’s price action.
Should the trend continue, Ethereum [ETH] could have the liquidity to drive the next risk-on move. That said, one of the first signs of such a rotation could already be taking place.
Ethereum’s liquidity setup could shape the next risk-on move
Ethereum’s stablecoin market seems to be witnessing a critical change.
USDC is gradually overtaking USDT and becoming the most popular stablecoin on Ethereum. Sure, USDT still holds the largest share of stablecoins on the L1, equal to 49.6%, while USDC accounts for 31.8%.
However, USDT’s lead is narrowing rapidly, down from 34.2 percentage points in November 2024 to just 17.8 percentage points now.
The key takeaway? The shift is being driven by USDC’s faster growth than by a major USDT exit. In particular, since November 2024, the supply of USDT has grown by 22%, while the supply of USDC has increased by 83%.
In 2026, the trend continued. While both decreased in supply, the decline for USDT was more significant, reaching 15.5% compared to 2.9% for USDC.
In essence, Ethereum’s liquidity setup is becoming more balanced.
Why does this matter? With a more balanced stablecoin mark-up, Ethereum is not relying on a single issuer for liquidity. If stablecoin supply on Ethereum begins to rise again, this could provide additional room for capital to flow into ETH and add fuel to its risk-on setup.
Strong network activity makes this proposition even more attractive. With the stablecoin market recovering and Ethereum activity high, ETH could well have the liquidity and network demand to fuel another powerful Q4.
Final Summary
- USDC is closing the gap with USDT, making Ethereum’s stablecoin liquidity more balanced.
- If liquidity keeps growing and network activity stays strong, ETH could get more fuel for a Q4 risk-on move.