How the Genius Act shifted institutional capital toward Ethereum
The radical shift in institutional investment
Since Congress signed the Genius Act—which stripped stablecoins of the right to provide any yield—institutional investors have had to seek a real alternative source of income. Thus began the shift from 'holding a stable coin with guaranteed yield' to 'storing Ethereum with a yield ranging from 4-6% and accepting price fluctuations.' This spark ignited a series of events on the blockchain:
Historical inflows into ETF funds
A flow of $402 million in a single day alone indicates institutions transitioning from 'monitoring' to 'actual capital commitment,' a sum that previously took weeks in past cycles. The continued 11 consecutive days of positive flows reflects a calculated strategy rather than a rapid rush, increasing the assets managed in Ethereum Spot ETF funds to $18.37 billion, representing about 9% of Ethereum's market cap.
Whale movements on the blockchain
Sharp Link Gaming raised its reserves to 358,000 Ethereum at an average price of $2,825, realizing an unrealized profit of nearly $260 million. At the same time, entities like Cumberland and FalconX accumulated tens of thousands of Ethereum in recent days. Massive transfers from Kraken to cold wallets freeze liquidity, reducing the available supply for trading and increasing demand pressure.
Redefining 'risk-free asset'
The fixed yields of USDT and USDC (5-8%) with a fixed price of one dollar previously made them the 'safe haven' for institutions. After the Genius Act, they transformed into tools for value storage with no yield, leading institutional capital to shift to Ethereum storage with a yield of about 4-6% while accepting price volatility. This is accompanied by an expectation of rising DeFi yields as an alternative income source.
Implications for governance and liquidity
With this shift, the share of Ethereum locked in Beacon Chain increases, and immediate liquidity decreases. Concurrently, a governance layer dominated by institutional storage service providers is formed, raising real questions about the balance of decentralization in the network's future.
Summary: A single legislative decision redirected billions of dollars to an asset with limited supply, increasing demand, reducing liquidity, and solidifying the influence of institutional storage providers, reshaping the investment and governance landscape of Ethereum.
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