Crypto bounces on renewed optimism House could pass key stablecoin legislation this week
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Cryptocurrencies and several stocks tied to the ecosystem rose Wednesday as investors dismissed a snag in what was expected to be a winning week for crypto regulation.
Bitcoin was last higher by 2% at $119,114.79, according to Coin Metrics, while ether rose 3% to $3,156.
Shares of stablecoin issuer Circle added more than 1% premarket and crypto services firm Coinbase gained about 0.5%, after both closed lower in the previous session. Ether treasury stocks continued their rally: BitMine surged 24%, while SharpLink jumped 14% and Bit Digital gained 5%.
On Tuesday, prices dipped briefly after the House failed to advance two key pieces of legislation for the crypto industry: the stablecoin bill known as the GENUIS Act, which has already passed the Senate, and the broader and far more complex market structure bill known as the CLARITY Act. Industry players including Coinbase hoped to see these bills move forward together, despite the latter one still awaiting a vote in the House.
Coinbase (COIN) and bitcoin (BTC) this month
Oppenheimer analyst Owen Lau told CNBC the stock reaction was overblown and framed the passage of the bills as a matter of “when” rather than an “if.”
“It’s not such bad news which is why the stocks [Coinbase and Circle] recovered in late trading,” he said. “Both stocks may be under pressure until we get the vote but these bills will eventually get passed after these negotiations.”
It doesn’t ultimately matter how they get passed – separately or bundled – “in terms of the terminal value … but the stock could react more positively if the bills get combined,” and the market “would lose three or four months of uncertainty,” Lau added.
President Donald Trump said in a social media post Tuesday night that several of the House Republicans who kept the bills from advancing had changed their minds following a White House meeting and will now vote to move the legislation forward.
In its current form, the GENIUS Act would restrict stablecoin issuers from paying users interest, which would reinforcing the importance of Ethereum – a network favored by institutions that supports a significant amount of activity and applications, including stablecoins – in the ecosystem.
Ether (ETH) has doubled in price in the last three months
However, ether’s recent rally, driven by momentum and speculative positioning among the boom in stablecoin interest and ether treasuries, has not been supported by fundamentals.
“Active addresses remain flat, network revenue is unchanged, and gas [transaction] fees have only ticked up slightly,” according to 10x Research’s Markus Thielen. Ether has doubled in price in the last three months.
Bitcoin, whose price slipped this week due to more than $360 million in long liquidations Monday, also dropped after the crypto bills were halted, but recovered soon after. On Monday, the flagship cryptocurrency reached an all-time high above $120,000.
Bitcoin ETFs saw $402.99 million in inflows from institutions on Tuesday, while ether funds raked in $192.3 million, according to SoSoValue.
—With reporting from CNBC’s Emily Wilkins, Erin Doherty and Greta Reich
