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The ongoing crypto bull market is now progressing towards its next logical paradigm shift, which is often characterized by Bitcoin ceding its leadership to Ethereum, as three powerful tailwinds coalesce to create a near-perfect updraft for Ethereum.
The crypto bull market typically follows a well-established pattern, where Bitcoin records outsized gains in the nascent stage of the bullish mania, only for Ethereum to take over once the bull market matures. Towards the tail-end of the market’s bullish mania, altcoins begin to pump en masse.
As stated earlier, three critical factors are currently contributing to Ethereum’s absolute and relative gains against Bitcoin.
Spot Ethereum ETFs have now accumulated 5,432,234.40 (5.432 million) Ether coins on a net basis, as per a tabulation by Coinglass.
Meanwhile, the SEC is expected to soon allow Ethereum spot ETFs to start offering Ether’s staking yield to their clients, improving the risk-return profile of these investments.
The SEC has already allowed the in-kind creation and redemption process for crypto ETPs. Under the previous cash-settled regime, ETP custodians would convert their crypto holdings to cash before redeeming any given unit. Now, however, these custodians can redeem a given unit of an ETP by transferring ownership of their custodied assets, without resorting to the cash intermediary.
Some publicly listed companies, such as Bitmine Immersion Technologies (BMNR), are now pivoting to a crypto treasury model, whereby these companies use equity and debt financing to acquire Ether coins, and then stake them to earn a yield.
Some companies, including GameSquare Holdings, BTCS, BitDigital, The Ether Machine, and ETHZilla, plan to boost their returns by investing their Ether holdings in the DeFi space, where returns typically exceed those offered by a simple staking of Ether coins. As a result, the stocks of these companies are expected to trade at a premium to the NAV of their Ether holdings.
As per a tabulation by Standard Chartered, since the beginning of June, the top ten Ethereum treasury companies have already gobbled up 1 percent of the total supply of Ether, and may eventually end up owning 10 percent of the total supply.
A critical point that places these Ethereum treasury companies at a distinct advantage vs. the spot Ethereum ETFs is their ability to exploit the regulatory arbitrage, which allows these firms to juice up their Ether yields by delving into the DeFi space, something that ETFs can’t do.
The third major factor that is boosting Ethereum’s price right now relates to the benevolent tailwinds that continue to emanate from Washington.
Back in June, President Trump officially signed the GENIUS stablecoin act, more formally known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act, into law, marking the first time that the US enacted a significant crypto-focused law.
The House has also passed two other crypto-focused bills: the anti-CBDC Act and the Clarity Act, which formally divides regulatory jurisdiction over the crypto sector between the SEC and CFTC and creates a framework for consumer protection. Both of these bills are now headed to the Senate.
Meanwhile, President Trump has now signed an executive order that allows retirement-focused 401(k) funds to dabble in cryptocurrencies, private equity, real estate, and other alternative assets.
Finally, do note that Ethereum is back at the $4,000 price level after a hiatus of around 8 months. This development has restored Vitalik Buterin’s entry into the coveted club of billionaires.
