Recent legislative developments in the United States suggest a promising future for Ethereum, especially as it continues to play a pivotal role in the expanding stablecoin ecosystem. The passage of the Genius Act marks a significant milestone towards the regulation and legitimization of stablecoins, especially US dollar-backed ones like USDC. This regulatory clarity, in turn, could unlock new levels of adoption and institutional participation, setting the stage for increased demand across the Ethereum network.
The Genius Act and Its Impact on Stablecoins
The Genius Act establishes clear operational rules for US dollar-backed stablecoins, providing a structured framework that fosters trust and transparency for both users and regulators. One immediate beneficiary of this development has been Circle, the issuer of USDC, whose stock surged over 200% shortly after going public in early June. This surge reflects growing investor confidence not just in stablecoins, but in the infrastructure that supports them — prominently, Ethereum.
Ethereum: The Backbone of Stablecoin Infrastructure
Ethereum holds a dominant position in the stablecoin market. It accounts for nearly 50% of the total stablecoin supply across various blockchains, making it the largest primary infrastructure layer supporting the stablecoin economy. In terms of transaction activity, Ethereum processes about 60% of all stablecoin transactions, far surpassing the next competitor, Tron, which holds around 15%.
As stablecoin adoption continues to rise, so will the use of networks that facilitate these transactions. Since stablecoins like USDC require Ethereum’s native coin (ETH) for paying transaction gas fees, increased activity means more transactions on Ethereum, driving network fees and usage.
Why Increased Ethereum Usage Matters
The growing transaction volume on Ethereum carries a dual benefit. Firstly, increased usage generates more in transaction fees for the network. Secondly, a portion of these fees is permanently burned, effectively decreasing the overall supply of ETH over time. This mechanism creates a scarcity effect that can support price appreciation and highlights why rising Ethereum activity is inherently bullish for ETH’s value.
Recent data shows a noticeable uptick in Ethereum transactions coinciding with the passage of the Genius Act. While these levels don’t yet reach the peak volumes seen in 2021, the upward trend is evident and accelerating. Such on-chain activity is a critical indicator of user engagement and network value.
Historical Patterns Suggest Potential for New Highs
Looking back at Ethereum’s history provides valuable context. The two most significant surges in Ethereum transactions occurred between 2016-2017 and 2020-2021. Both cycles culminated in substantial price rallies and new all-time highs for ETH.
Though history isn’t a guaranteed predictor of future outcomes, these patterns underscore the importance of growing on-chain activity as the foundation of major bull runs. If Ethereum’s usage continues to climb steadily, boosted by the regulatory clarity ushered in by initiatives like the Genius Act, reaching new all-time highs becomes a tangible possibility.
Conclusion
Ethereum's role as the leading infrastructure for stablecoins positions it uniquely to benefit from growing adoption in this sector. The Genius Act’s clarity around stablecoin regulation acts as a catalyst, awakening renewed interest and usage on the Ethereum blockchain. Combined with Ethereum’s built-in supply-burning fee model, this creates a compelling bullish narrative for ETH.
Increased on-chain activity—not just in isolated spikes but sustained growth—has historically preceded Ethereum’s biggest price rallies. As the stablecoin economy expands and Ethereum’s network usage rises, the stage is set for Ethereum to unlock its full potential and ultimately reach new all-time highs in the near future.
By Wolfy Wealth - Empowering crypto investors since 2016
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