MW Long-battered ether may be seeing a resurgence thanks to stablecoins. Here's why.

By Frances Yue

Long-suffering ether holders are feeling more upbeat about prospects for a resurgence thanks to rapidly growing interest in stablecoins, a class of crypto whose value is pegged directly to the dollar or other assets.

For over a year, ether (ETHUSD) has seen sluggish performance compared with bitcoin (BTCUSD) and other competing crypto, as the former grappled with relatively muted institutional interest, competition from other blockchains such as Solana, and complaints that Ethereum, the blockchain behind ether, is too slow and expensive for processing transactions.

However, ether appears to be narrowing the gap recently, outperforming bitcoin and solana since a month ago and picking up more steam against its rivals over the past week.

Ether was up 2.4% over the past five days, versus a 1% gain by bitcoin during the same period. Ether fell 3.3% to $2,557 Friday morning, while bitcoin lost 1.4% to $105,308.

There is still a long way to go for ether to catch up. Bitcoin repeatedly hit record highs this year, on Friday trading roughly 6.4% away from its all-time high at $111,986, reached on May 22. However, ether was still 46.7% below its all-time high at $4,800. Bitcoin rose 12.7% year to date, while ether fell 24% for the same period.

Ethereum may finally have its moment to shine, as the blockchain has the potential to benefit the most from a growing interest in stablecoins, according to Youwei Yang, chief economist at crypto mining company BIT Mining. Stablecoin is a type of crypto that has its value pegged to a currency or a commodity, with the vast majority of them tied to the U.S. dollar.

Ethereum is the largest blockchain for stablecoins, where about half of the crypto is issued, according to data from DefiLlama. Investors would deposit U.S. dollar or other assets with a stablecoin issuer - then the issuer would mint an equivalent amount of stablecoins on Ethereum.

Underpinning Ethereum's potential is that it is the largest blockchain supporting smart contracts, or computer programs that can self-execute when certain conditions are met. For example, on some decentralized exchanges, an investor could swap one token for another, with no intermediaries involved.

That is different from bitcoin, which crypto bulls argued could eventually serve as a store of value and a hedge against the existing monetary systems.

Interest in stablecoins is on the rise thanks to a string of positive developments. New legislation aiming to regulate stablecoins advanced in the Senate on Wednesday, clearing the path for its final passage, while stablecoin issuer Circle had a successful debut as a public company last week.

As Circle's stablecoin USDC (USDCUSD) is primarily issued on Ethereum, the company's public listing could increase institutional credibility for the coin, potentially also pushing up activity on Ethereum, Yang said in emailed comments.

Furthermore, ether may benefit from an increase in activity in real-world tokenization, noted Yang. The potential growth in stablecoins might push forward the development of real-world asset tokenization, or the creation of a digital representation of assets on a blockchain, Yang noted.

Several asset managers, such as BlackRock $(BLK)$ and Fidelity, have launched tokenized money-market funds in 2024 and earlier this year, respectively. Both funds were first issued on Ethereum.

Notably, "Ethereum's native role in tokenization and settlement rails may be primed for outsized structural upside," analysts at QCP said in a recent note.

Adding to the tailwinds was that the Ethereum blockchain last month went through a so-called Pectra upgrade, which pushed the blockchain a step forward to becoming speedier and more affordable while handling a growing amount of transactions.

-Frances Yue

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June 13, 2025 10:05 ET (14:05 GMT)

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