Ethereum is once again doing better than Bitcoin, and it might be because of U.S. laws. Analysts say that Ethereum could benefit from the possible limits on yield-bearing stablecoins as the GENIUS Act gets closer to becoming law. At the heart of it all? Ethena’s $5 billion synthetic dollar, USDe.
How is the GENIUS Act impacting Ethereum?
Since the upcoming GENIUS Act is expected to outlaw yield-bearing stablecoins that guarantee interest-like returns, Ethereum’s native token, ether (ETH), is gaining ground against bitcoin (BTC), according to Markus Thielen, founder of 10x Research.
According to data source TradingView, the ether-bitcoin ratio, which represents the price of ether in BTC, had its best performance since May 13 on Tuesday, rising more than 5.96% to 0.02670.
The upward move signalled a bullish conclusion to the multi-week range play and points to more ether outperformance in the future. For the first time since February, the price of ether in dollars increased by more than 4%, reaching $3,100.
The main factor behind the price increase of ether, according to Markus Thielen, founder of 10x Research, appears to be the increasing expectation that the GENIUS Act, or the U.S. stablecoin bill, will be passed, which would prevent U.S. stablecoin issuers from paying interest, as per a report.
“The GENIUS Act has brought attention to Ethena’s $5 billion synthetic dollar USDe, which shorts perpetual futures equal to the amount of ETH received from users as collateral in order to achieve cash and carry arbitrage or delta-hedging,” Thielen continued.
This process generates yield on USDe. The widely held belief is that shorting operations narrow the difference between futures and spot prices and increase bearish pressures in the futures market.
What’s behind Ethena’s growing influence?
Ethena, Ethereum’s 4% stake in open interest, has been steadily driving down ETH prices by disposing of futures. Since synthetic dollars, like the USDe, are a payment instrument rather than a security and are not covered by the GENIUS Act or the STABLE Act, Ethena has gotten in touch with the US SEC to ask questions about their use.
The majority of the new dollar inflows to Ethena, which has its headquarters in Lisbon, Portugal, come from sources outside the US. Ethena may be compelled to cease purchasing Ethereum if it disregards the US stablecoin bill. As the ENA-USDT continues to rise, bolstered by rising Ethereum funding rates, the market may interpret this dynamic differently.
Could this spark more ETH ETF inflows?
With almost $300 million in revenue over the last 12 months, token-based ETF Ethena has lagged behind Tether, Ethereum, Circle, and Solana. In a single month, the token also brought in $15 million in fees.
Hedge funds have implemented funding arbitrage strategies in response to the increase in funding rates, which could result in more inflows into Ethereum ETFs. With bipartisan support, the GENIUS Act was approved in June and will now be put to a vote on the House floor.
Also read: From $68K to $15M: The High-Risk Crypto Strategy That Changed One Trader’s Life
