Firi Weekly: The Stablecoin Summer of '25

Wyoming Launches State Stablecoin:
- First U.S. state issues FRNT stablecoin on seven blockchains, fully USD-backed with 2% over-collateralization, signaling governmental acceptance of digital assets.
ECB Eyes Blockchain Euro:
- European Central Bank reportedly considers digital euro on public blockchains as USD stablecoins outnumber EUR ones 590-to-1.
Whale Rotates to Ethereum:
- Dormant Bitcoin whale sells 24,000 bitcoin, worth $2.7 billion, partially converts it to Ether, and helps push Ethereum to new all-time high of $4,950.
September Rate Cut Likely:
- U.S. Federal Reserve Chair Powell hints at rate cuts with 86.3% probability priced in—typically positive for crypto markets.

Last Week’s Big Three

First U.S. State Issues Stablecoin: Wyoming made history Tuesday by launching the Frontier Stable Token (FRNT), becoming the first U.S. state and public entity to issue a stablecoin. FRNT will be issued on seven blockchains—Arbitrum, Avalanche, Base, Ethereum, Optimism, Polygon, and Solana—backed fully by U.S. dollars and short-duration Treasuries with 2% over-collateralization.

Wyoming's stablecoin marks a watershed moment for crypto legitimacy. The state-backed token could accelerate institutional adoption, as investors may trust government-issued stablecoins more than private alternatives. It also signals to other states and countries that digital assets demand serious consideration.

European Central Bank Explores Blockchain Euro: It seems Wyoming is not the only public entity thinking about stablecoins, as The Financial Times reports that the European Union is exploring the launch of its digital euro on public blockchains, not just as a Central Bank Digital Currency (CBDC) on the European Central Bank's (ECB) proprietary systems. After years of apparent reluctance toward stablecoins, it appears that both the EU and the ECB are waking up to the reality that stablecoins may be here to stay. According to The Financial Times, sources familiar with the discussions said as much, though nothing is official yet.

If the ECB proceeds with a blockchain-based digital euro, it would provide substantial market legitimacy, similar to Wyoming's initiative, while encouraging more Europeans to utilize stablecoins. However, the impact will depend on timing and features, which remain uncertain.

Massive Bitcoin Whale Rotates to Ethereum: A Bitcoin whale dormant for over five years seemingly began liquidating between Wednesday and Sunday, selling more than 24,000 bitcoins worth $2.7 billion. The whale then appeared to reinvest most of the proceeds into Ethereum, acquiring over 400,000 Ether worth $1.84 billion.

This rotation seems to have contributed to Ethereum’s new all-time high of $4,950 on Sunday, while Bitcoin declined. The key question now is whether this new Ethereum whale will hold long-term or exit crypto entirely. If the former, Ethereum could face significant downside pressure should the whale decide to sell its newly acquired Ether.

Behind the Charts

Chart 1: Bitcoin and Ethereum Prices During August

As shown above, Ethereum reached a new all-time high during the weekend of approximately $4,950, while Bitcoin actually declined during the same period and has been retreating since setting its new all-time high on August 14. Overnight, however, most crypto assets declined in value, including both Bitcoin and Ethereum, with Ethereum now trading below its previous all-time high.

Looking at the main drivers for Ethereum's outperformance—beyond the aforementioned whale rotation from Bitcoin—several factors stand out. The explosive growth of stablecoins, the majority of which are issued on the Ethereum network, continues driving demand. Additionally, Ethereum-centric treasury firms have been accumulating substantial Ether positions, and the overall macroeconomic environment has turned increasingly favorable, which we will explore in greater detail below.

Chart 2: The Markets’ Expectations of a September Cut

Last week, the U.S. Federal Reserve (Fed) — the nation’s central bank — hosted its annual three-day Jackson Hole Economic Symposium, drawing together global financial and policy leaders to tackle long-term economic questions

On Friday, the conference's final day, Fed Chair Jerome Powell delivered a speech in which he strongly hinted that an interest rate cut for the U.S. dollar is likely at the Fed's meeting in mid-September. Before the speech, markets were pricing a 75% chance of a September rate cut, but following his remarks, that probability jumped to 86.3%. If the Fed does cut rates in September, it would generally be positive for crypto markets, as lower rates make investors more willing to allocate capital to risk assets such as digital currencies. In other words, this expectation likely contributed to crypto's weekend rally.

However, Powell stressed there remain uncertainties about whether President Donald Trump's tariffs could spur more lasting inflationary pressures, which would argue against cutting interest rates in September.

Chart 3: Daily U.S. Bitcoin and Ethereum ETFs Net Flow

The U.S. ETF flow data clearly illustrates Ethereum's recent outperformance relative to Bitcoin. From August 15, both U.S. Bitcoin and Ethereum spot ETFs started experiencing daily outflows of varying degrees.

However, on Thursday and Friday last week, Ethereum ETFs reversed course, recording daily net inflows of $287.6 million and $337.7 million, respectively, while Bitcoin ETFs continued to see net outflows of $194.4 million and $23.2 million on the same days.

A Number to Remember

590 times more

This figure seems to be the primary reason the EU and ECB are considering issuing their digital euro on public blockchains. At present, USD-denominated stablecoins backed by bank deposits vastly outnumber their EUR-denominated counterparts. Such a disparity poses a potential threat to the euro’s global influence provided stablecoins continue to grow.

On Our Radar

What we are watching this week:

Rate Cut Confirmation: We are monitoring for additional signals from the Fed or Powell that could either confirm the market's 93% conviction in September cuts or introduce doubt, given last week's significant price reaction to Powell's speech.
Bitcoin ETF Flow Reversal: We are tracking when U.S. Bitcoin ETF flows turn positive, similar to Ethereum's Thursday-Friday reversal. Positive flows would signal improved sentiment from the negativity since August 15—one day after Bitcoin's all-time high.
More Stablecoin Developments: Following last week's groundbreaking stablecoin news—a key growth driver for digital assets—we are watching for additional government or institutional initiatives that could further legitimize the sector.

Mads Eberhardt25/08/2025

Should not be considered financial advice. Crypto may involve high risk.