Bitcoin Holds Firm as Altcoins Rally and Regulation Advances

Key Takeaways

• A Bitcoin supply shock fuels strong altcoin rallies across digital assets
• ETF inflows surge, with BTC and ETH pulling in over $2 billion last week
• Regulatory momentum from the GENIUS Act boosts market confidence

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Digital Asset Commentary

The Bitcoin market is digesting the impact of a long-dormant wallet from 2011 moving 80,000 BTC to exchanges. Despite this significant supply increase, Bitcoin is holding just below its all-time highs. The broader market shift in relative value rotations has also fueled strong outperformance from altcoins over the past two weeks. Bitcoin dominance, the share of BTC's market cap relative to all cryptocurrencies, has dropped from 66% to 60% over the past month.

New and existing Bitcoin treasury companies continue to accumulate BTC, including MSTR’s $739 million purchase last week. BTC ETFs also brought in $2.38 billion in net inflows, yet Bitcoin has still not broken to new highs. Ethereum ETFs also posted a record week, drawing $2.18 billion in inflows, bringing cumulative net flows to nearly $8 billion since their July 2024 launch.

The strong inflows last week were supported by the signing of the GENIUS Act by President Trump, which established regulatory clarity for stablecoin issuers. The law mandates full reserve backing, regular audits, and transparency, while also permitting banks to issue their own stablecoins. There are currently around $260 billion worth of stablecoins in circulation, primarily Tether and Circle’s USDC, across multiple blockchains, with Ethereum and Tron accounting for the largest share. The new framework is expected to trigger a surge in stablecoin issuance from banks and corporations, helping absorb the growing volume of US government debt hitting the market.

Up next is the CLARITY Act, which aims to define a regulatory structure for the broader crypto market. The legislation will streamline how entities launch compliant crypto products, including ETFs and other vehicles. Features such as staking, to introduce yield, and in-kind creation/redemption, to reduce friction and fees, are expected to be approved under this pending framework.

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