Ether Races 6% Against Bitcoin as GENUIS Act Puts Spotlight on Yield-Bearing Stablecoins: Analyst
Ethereum’s ether (ETH) is outperforming bitcoin (BTC), driven by anticipation surrounding the GENIUS Act, a U.S. stablecoin bill poised for a House vote. This bill aims to restrict interest payments on stablecoins issued in the U.S. According to Markus Thielen of 10x Research, this restriction could significantly boost Ethereum’s position within the crypto ecosystem.
The ether-bitcoin ratio surged over 5.96% on Tuesday, reaching its highest point since May 13, indicating a strong bullish trend. Simultaneously, ether’s price against the dollar climbed over 4%, exceeding $3,100 for the first time since February.
Thielen highlights Ethena’s USDe, a $5 billion synthetic dollar, as a key factor influencing this price surge. Ethena generates yield on USDe through delta-hedging and arbitrage, involving shorting perpetual futures contracts equivalent to the ETH received as collateral. This shorting activity, representing approximately 4% of Ethereum’s $26 billion open interest, has been argued to exert downward pressure on ETH prices.
However, the potential impact of the GENIUS Act on Ethena is creating market uncertainty. If the act passes, Ethena might be forced to cease its ETH purchases, potentially altering market dynamics. Despite this, Ethena’s USDe continues to appreciate, supported by rising Ethereum funding rates. Ethena, headquartered in Lisbon, Portugal, maintains that its synthetic dollar functions as a payment instrument, not a security, thus potentially falling outside the scope of the GENIUS Act and the STABLE Act. They have reportedly contacted the SEC for clarification. The ongoing situation underscores the complex interplay between regulatory developments and market reactions within the cryptocurrency landscape. The bill’s potential impact on stablecoin issuance and Ethereum’s role remain central themes, shaping the current market dynamics. The House floor vote is expected by Thursday.
