Cryptocurrency market capitalization approaches $4 trillion, where is the money coming from? Can the upward trend continue? This article decodes the capital flow and the code behind the rise.
Written by: Tanay Ved
Translated by: Saoirse, Foresight News
Key Points:
- Bitcoin's realized market capitalization has exceeded $1 trillion, reflecting that as the total cryptocurrency market cap approaches $4 trillion, long-term holders are investing more funds with greater conviction.
- Continuous capital inflows from spot ETFs and increasing corporate cash reserves have led to demand for BTC and ETH exceeding new issuance.
- The market dominance landscape is gradually expanding, with ETH relatively strengthening, and Altcoins like SOL and XRP increasing participation through growth in spot trading volume.
- The 'GENIUS Act' established the first federal regulatory framework for fiat-backed stablecoins in the US, bringing regulatory clarity to the stablecoin market exceeding $250 billion and laying the foundation for enhanced industry participation and competitiveness.
Introduction
The digital asset market has approached $4 trillion for the first time, marking a significant milestone for the industry. This latest rally stems from a combination of structural and cyclical factors, including continuous capital inflows into Bitcoin and Ethereum spot ETFs, accelerated accumulation by digital asset fund management companies, and major regulatory breakthroughs like the passage of the 'GENIUS Act'. The driving force behind cryptocurrencies seems to be continuously strengthening.
In this article, we will analyze the key market forces and on-chain fund flows driving this expansion phase.
Bitcoin's Realized Market Cap Reaches $1 Trillion, Market Activity Broadens
Bitcoin hit a historical high of $123,000, with its market cap rising to $2.38 trillion, and its "realized market cap" breaking through $1 trillion. This data reflects deeper fund investment when prices are high and highlights Bitcoin's increasingly recognized status as a global asset against the backdrop of sustained ETF demand and increased institutional attention.
(Note: Realized market cap is calculated based on the price of each token at its last on-chain movement, providing a more accurate representation of market participants' actual fund investment and asset sedimentation. Compared to the regular market cap (calculated at current prices), it better reflects long-term holders' confidence and the market's true valuation.)
[Rest of the translation follows the same professional and precise approach]Among existing issuers, Circle and Paxos seem to be prepared to meet the requirements of the GENIUS Act, with their issued USDC and PayPal USD (PYUSD) backed by full reserves and undergoing regular verification. Circle is actively applying to the Office of the Comptroller of the Currency (OCC) for a federal trust bank license to fully comply with the GENIUS Act and provide custody services for institutional clients. Other major issuers are also adjusting their structures to adapt to the new regulations. Federal chartered crypto bank Anchorage Digital has partnered with Ethena Labs to launch USDtb through its stablecoin issuance platform, making Ethena's USDtb one of the first stablecoins fully compliant with the GENIUS Act, with Anchorage responsible for federal regulation and reserve management. This model provides a "one-stop" solution for other projects looking to operate in the US market.
Tether (USDT), which occupies about 68% of the stablecoin supply, faces a more complex compliance path. USDT has historically operated outside direct US regulation, with reserves including non-compliant assets such as Bitcoin and precious metals. In response, Tether plans to launch an independent, US regulation-compliant stablecoin focused on institutional payments and interbank settlements. The new product will follow GENIUS Act standards, while the existing $162 billion USDT will continue to operate in offshore markets, primarily serving emerging markets.
Stablecoin issuers have three years to comply with the GENIUS Act. After three years, only stablecoins that meet the act will be supported by exchanges and custody institutions, providing time for issuers to adapt to the new framework.
Conclusion
The market's recent push towards a $4 trillion market value reflects growing investor confidence in these assets. ETF and corporate fund reserve demand continues to exceed new issuance, creating favorable supply dynamics for Bitcoin and Ethereum. Bitcoin's market value to realized value (MVRV) and other valuation indicators suggest the market has not yet entered an overheated stage. Although Bitcoin maintains its core position through strong ETF fund inflows and long-term holders, the market's dominant landscape shows signs of broadening.
Moreover, the passage of the GENIUS Act marks a critical turning point in US cryptocurrency regulation, bringing clarity to the stablecoin sector and paving the way for enhancing industry competitiveness and deepening integration with traditional finance. Despite potential short-term volatility, strong structural demand, continuously improving regulatory environment, and increasingly broad participation all suggest the market is likely to remain robust in the future.
