Ethereum has risen nearly 45% over the past two weeks due to a combination of regulatory clarity, growing institutional demand, and favorable supply dynamics, according to analysts at Bernstein.
The GENIUS Act, signed by the President of the United States, recognized stablecoins as a legitimate digital means of payment. This change has once again drawn attention to Ethereum, the primary blockchain supporting stablecoin transactions.
More than 60% of the total USDC supply is held on Ethereum. The platform also contains about 33% of the $25 billion market for tokenizing real assets, primarily concentrated in tokenized money market funds. The largest of these, BlackRock's $2.8 billion BUIDL fund, is built on Ethereum.
Ethereum's role as an investment asset is bolstered by staking yields, currently around 2.9% when calculated in ETH.
All transactions involving stablecoins and tokenized assets require gas fees paid in ETH. These transaction fees form the basis for validator rewards and staking yields.
As network activity grows, so do yield expectations, stimulating an increase in staking. The share of ETH being staked has risen to nearly 30% compared to 24% in January 2024.
ETH ETFs are also seeing a rise in inflows. Year-to-date, inflows into ETH ETFs have reached $4.8 billion compared to $19 billion for Bitcoin ETFs.
However, the momentum is changing. In just the past week, ETH ETFs attracted $2.2 billion, nearly matching the $2.4 billion for Bitcoin.
On one trading day, inflows into ETH ETFs exceeded inflows into Bitcoin for the first time, amounting to $602 million compared to $523 million.
BlackRock (New York:BLK) recently filed to modify its ETHA ETF to include staking yields, potentially offering around 3% if approved.
Institutional accumulation has gone beyond ETFs. Companies forming treasury reserves of Ethereum using a model popularized by MicroStrategy for Bitcoin acquired approximately 430,000 ETH just in July, which is about 0.6% of the total ETH supply.
These companies intend to place their ETH reserves in staking contracts and decentralized finance applications for yield generation.
The supply of Ethereum has remained stable since the implementation of EIP-1559 in 2021, which introduced a mechanism for burning a portion of transaction fees.
The supply of ETH has grown at a compound annual rate of only 0.8% over the past four years, creating deflationary pressure that supports price growth alongside increasing demand.
Institutional interest, the expansion of ETF products, and a stable economic model based on transaction yield continue to strengthen Ethereum's role in the evolving landscape of digital assets.
