Ethereum’s recent market strength may have further room to run as Wall Street begins issuing large volumes of stablecoins within its ecosystem, according to a Thursday note from JPMorgan. The bank’s analysts believe the surge will be fueled by the recent passage of the GENIUS Act, a new U.S. regulatory framework for stablecoins, which has set the stage for institutional issuers to roll out dollar-pegged tokens at scale.
JPMorgan highlighted that even if many of these assets launch on Ethereum layer-2 networks rather than directly on the base layer, they should still influence ETH’s price. “We think ether is emerging as a direct way to gain exposure to the expected meteoric growth in stablecoins as the Ethereum network hosts most of these stablecoin assets, directly as the L1 or indirectly through some L2s,” the analysts wrote.
Ethereum’s Stablecoin Dominance
On Thursday, Ethereum was trading around $4,540—down 3.5% over the previous 24 hours, according to CoinGecko. Despite recent gains, ETH has yet to surpass its 2021 all-time high of $4,900. Still, Ethereum continues to dominate the stablecoin sector, with $138 billion worth of tokens issued on its network, representing a 51% share of the $270 billion market, per DefiLlama data.
JPMorgan last month projected the stablecoin sector could reach $500 billion in market value by 2028, while U.K. bank Standard Chartered offered a more aggressive forecast of $750 billion by the end of 2026. The market cap for stablecoins rose for the eighth consecutive month in July, with year-to-date growth outpacing the broader cryptocurrency market.
Stablecoins Driving Network Activity
The bank’s analysts noted that stablecoins are growing faster than the overall crypto market, a trend they believe highlights the asset class’s maturing use cases and adoption. This increased activity on Ethereum can directly impact ETH’s price, since transaction fees paid by users are burned, reducing supply. At times, this burn mechanism has offset the issuance of ETH generated through staking.
From Skepticism to Institutional Adoption
Just months ago, some analysts questioned whether layer-2 scaling networks were a net positive for Ethereum, noting that upgrades reducing transaction costs had pushed ETH’s burn rate to multi-year lows in April. However, sentiment shifted following Circle’s high-profile IPO, which amplified stablecoin interest on Wall Street, and Robinhood’s unveiling of its own layer-2 network built on Ethereum.
According to JPMorgan, the GENIUS Act has already sparked higher activity in decentralized finance, NFTs, and spot markets—particularly in the U.S. The bank suggested that partnerships between traditional finance and decentralized finance are creating “a more sustainable bridge” between the two, supporting a long-term structural trend that could keep Ethereum in an advantageous position.