Ethereum Network Split: USDT Holdings Plummet Amid Fee Collapse
The Ethereum network is experiencing an unusual split, as data from Santiment shows that USDT on Ethereum has lost 251,350 non-empty wallets over an 11-day span. This marks its steepest short-window decline since the post-FTX market upheaval in December 2022.
This sharp decline could indicate that smaller holders are consolidating balances or moving funds to Layer-2 networks, such as Arbitrum, Optimism, Base, and Linea. It may also suggest that investors are taking a risk-off approach during uncertain market conditions.
On the other hand, Ethereum fees have plummeted from $0.72 on April 21 to $0.095, an 86.8% drop. This significant decrease is attributed to increased blob capacity, an expanded 60M gas limit, and growing adoption of Layer-2 scaling solutions.
For DeFi users, the lower Ethereum fees create a cheaper trading window for yield farmers, liquidity providers, arbitragers, and MEV searchers to rebalance positions without incurring excessive gas costs. However, if mainnet USDT balances continue to shrink while overall stablecoin market capitalization stagnates, altcoin liquidity could face headwinds.