Ethereum has risen by about 45% over the past two weeks, driven by a confluence of regulatory clarity, increased institutional demand, and favorable supply dynamics, according to Bernstein analysts.
The GENIUS Act was signed by the U.S. president, who recognized stablecoins as legal digital currency. This shift has rekindled interest in Ethereum, the main blockchain supporting stablecoin transactions.
More than 60% of the total USDC supply exists on Ethereum. The platform also hosts about 33% of the $25 billion real asset tokenization market, heavily concentrated in tokenized money market funds. The largest of these funds, BlackRock's $2.8 billion BUIDL fund, is built on Ethereum.
Ethereum's role as an investment asset is reinforced through staking yield, which currently stands at about 2.9% in ETH.
All transactions of stablecoins and tokenized assets incur gas fees paid in ETH. These transaction fees form the basis of validator rewards and staking returns.
As activity on the network grows, yield expectations rise, encouraging more staking. The percentage of ETH staked has increased to nearly 30%, up from 24% in January 2024.
Ethereum ETF funds have also seen an increase in inflows. Year-to-date, Ethereum ETF inflows reached $4.8 billion, compared to $19 billion for Bitcoin ETFs.
However, the momentum is shifting. Last week alone, Ethereum ETFs attracted $2.2 billion, nearly matching Bitcoin's inflows of $2.4 billion.
In a single trading day, Ethereum ETF inflows surpassed Bitcoin inflows for the first time, at $602 million compared to $523 million.
BlackRock Inc. (NYSE:BLK) recently filed to amend its ETHA ETF to include staking yield, which could provide approximately 3% if approved.
Institutional accumulation has extended beyond ETF funds. Ethereum treasury companies, following the model popularized by MicroStrategy for Bitcoin, have acquired around 430,000 ETH so far in July, representing about 0.6% of the total ETH supply.
These companies intend to deploy ETH holdings in staking contracts and decentralized finance applications to achieve yields.
The Ethereum supply has remained stable since the implementation of EIP-1559 in 2021, which introduced a mechanism for burning a portion of transaction fees.
The ETH supply has grown at a compound annual growth rate of only 0.8% over the past four years, adding deflationary pressure supporting price increases alongside rising demand.
Institutional interest continues, the expansion of ETF products, and the stable economic model centered around transaction-driven yield are solidifying Ethereum's role in the evolving digital asset landscape.
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