The current momentum in blockchain markets represents a fundamental shift in financial infrastructure rather than another speculative crypto wave, according to Bernstein's latest memo.
What Happened: In a note sent to Benzinga on Monday, the analysts described how recent developments, particularly the bipartisan passage of the U.S. GENIUS Act and the public listing of Circle (NASDAQ:CRCL), have solidified stablecoins as regulated digital cash.
The GENIUS Act, signed into law by President Donald Trump, formally legalizes the use of stablecoins in digital payments, marking a critical turning point in U.S. financial regulation.
Bernstein emphasizes that this regulatory clarity is helping shift blockchain technology from speculative use cases to core financial infrastructure.
Ethereum has emerged as the principal beneficiary of this transformation.
With over 60% of USDC (CRYPTO: USDC), the leading dollar-backed stablecoin issued on Ethereum, and nearly a third of the $25 billion in tokenized assets operating on its network, Ethereum has reasserted its position as the leading blockchain for real-world financial applications.
BlackRock's (NYSE:BLK) tokenized BUIDL fund, now valued at approximately $2.8 billion, also runs on Ethereum.
"Ethereum is having its moment," the analysts wrote, noting that ETH has risen roughly 45% in just two weeks.
That surge, they argue, is underpinned not by speculation but by fundamental demand for the blockchain's utility as a financial settlement layer.
As more capital flows into Ethereum to deploy stablecoins, operate DeFi applications, and facilitate tokenized asset transactions, network fees increase fueling ETH staking yields and reinforcing long-term holding behavior.
Currently, about 30% of ETH supply is staked, up from 24% in January 2024, indicating growing confidence in the protocol's yield-bearing properties.
Ethereum staking yields, currently around 2.9% in ETH terms, are fueled by transaction fees and validator emissions.
According to Bernstein, this creates a "positive feedback loop": more transactions drive higher fees, which boost staking yields, thereby increasing the incentive to acquire and stake ETH.
This yield dynamic is also being reflected in institutional investment flows. ETH spot ETFs, once lagging behind their Bitcoin counterparts, are now rapidly catching up.
Bernstein reported that Ethereum ETFs brought in $2.2 billion last week, nearly matching the $2.4 billion in Bitcoin ETF inflows.
On one day alone, ETH ETF flows surpassed Bitcoin's for the first time. BlackRock has also filed to amend its (NASDAQ:ETHA) ETF to include staking yields, potentially offering around 3% in returns, transforming ETH from a capital gains asset into one with income potential.
Also Read: Ethereum Roars To $3,800: What’s Driving The Surge?
Why It Matters: The firm also highlighted the emergence of “Ethereum treasury companies, “firms that hold ETH on their balance sheets to earn yield through staking or decentralized finance protocols, similar to how Strategy (NASDAQ:MSTR) pioneered the Bitcoin treasury model.
Meanwhile, Ethereum's supply growth has been tightly controlled due to the EIP-1559 upgrade, which permanently removes a portion of transaction fees from circulation.
The result is a near-flat annual supply increase of just 0.8% over the past four years.
With over a quarter of ETH locked in staking contracts and growing institutional buying pressure, Bernstein sees a structurally deflationary setup supporting long-term price appreciation.
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