Eterna's Insights - May 2025

Bitcoin Hits New All-Time High at $112K Amid Market Momentum

Bitcoin surged to a new all-time high of $112,000 on May 22, topping its previous record of $107K set in January 2025. This rally caps a week of steady gains, climbing past $109K and $110K before peaking. BTC had faced a sharp 39% correction earlier this year, dropping to $77K amid tariff uncertainty and a weakening macro backdrop. While BTC has slightly pulled back following President Trump's announcement of 50% tariffs on Europe, it ended the month in the $104K-$105K range.

The rally has been reinforced by strong signals in derivatives markets: open interest across exchanges hit an all-time high, the call-put ratio climbed to 1.5, and short-term implied volatility has dropped to an 18-month low of 35-40%. This combination of bullish sentiment and low volatility points to rising leverage as a key force behind Bitcoin’s latest breakout.

U.S. Senate Stablecoin Bill Clears Key Vote, Moves Toward Passage

The U.S. Senate’s stablecoin legislation, the GENIUS Act, cleared a major hurdle two weeks ago with a decisive 69-31 cloture vote, setting the stage for full floor debate and a likely passage. After initial approval, several senators flipped their votes to support the bill. The Senate passed a motion to proceed to formal debate, where amendments will require 60 votes to be adopted. A final vote on the bill could come as early as this month, needing only a simple majority for passage.

If approved, the House will need to pass its version - likely the STABLE Act - before both chambers reconcile differences and send the final legislation to the President’s desk. Lawmakers are aiming to complete the process before the August recess, potentially ushering in the first comprehensive federal framework for stablecoins.

Ethereum Gains New Momentum with Pectra Upgrade, Leadership Restructuring, and Market Rebound

Ethereum is regaining momentum after a period of sluggish performance, driven by sweeping technical upgrades, leadership changes, and a sharp market rebound. On May 7, the network activated the Pectra upgrade, its first major update since Dencun, bringing significant improvements to user and validator experience. Pectra introduced EIP-7702, a big step toward account abstraction, enabling wallets to batch transactions, sponsor gas, and set spending limits. For validators, EIP-7251 raised the maximum effective balance from 32 to 2048 ETH, allowing greater operational efficiency, while EIP-6110 shortened validator activation times from nine hours to 13 minutes.

Simultaneously, the Ethereum Foundation has restructured leadership, with Vitalik Buterin emphasizing the transition to a new generation of technically credible leaders. Researcher Dankrad Feist has also proposed EIP-9698 to gradually raise Ethereum’s gas limits by 100x, while Buterin has floated replacing the EVM with RISC-V - a bold move that could enhance long-term performance and modularity.

Adding to this positive momentum, Ethereum’s market performance has notably improved. After hitting a five-year low of 0.018051 on April 21, 2025, the ETH/BTC ratio surged 38% to 0.024927 by May 29. ETH’s price jumped from $1,812 to over $2,661, while BTC dominance dropped slightly and ETH’s market share climbed by over 2 percentage points to 9.20%. ETH’s open interest leverage ratio also hit an all-time high, reflecting increased bullish positioning.

Together, these technical, governance, and market tailwinds signal a rejuvenated Ethereum ecosystem positioning itself strongly for the next phase of growth.

Crypto Treasuries — Booming Trend or Ticking Time Bomb?

A wave of companies is pivoting their corporate treasuries from fiat to crypto, chasing the outsized returns pioneered by MicroStrategy - now rebranded as Strategy - which amassed over 300,000 BTC through aggressive convertible debt and ATM equity issuance. Since early 2023, Strategy’s stock has soared ~12,000%, far outpacing Bitcoin’s ~300% gain. Inspired by this success, firms like Metaplanet, Upexi, and The Blockchain Group are issuing convertible bonds to build their own crypto treasuries, betting on crypto appreciation and financial alchemy to boost shareholder value.

However, risks are mounting. These companies face a growing asset-liability mismatch - holding volatile crypto while expenses remain in fiat. For example, sustained Bitcoin price drops could trigger liquidity crunches, forcing distressed sales or dilutive financing. As more firms copy the model, the ability to issue stock at premiums to NAV is eroding. With some now turning to treasuries backed by SOL, XRP, and even meme coins like TRUMP, the trade is getting riskier, particularly for firms lacking robust core businesses to weather market downturns.

Sui Validators Intervene to Recover $223M After Cetus Protocol Exploit

On May 22, 2025, Cetus Protocol - the flagship DEX on the Sui blockchain - was exploited for $223 million in assets after a flash loan attack triggered an integer overflow in its liquidity calculations. The attacker drained large amounts of SUI, USDC, and haSUI before the protocol could be paused. In a swift response, Sui validators voted overwhelmingly to freeze and recover the stolen funds, transferring roughly $162 million to a multisig wallet controlled by Cetus, the Sui Foundation, and OtterSec. However, about $60 million had already been bridged out before the intervention. To cover the shortfall, the Sui Foundation extended a loan to Cetus, though details remain undisclosed. While most funds were recovered, the event leaves Cetus structurally short a significant amount of SUI, raising ongoing concerns about protocol resilience and recovery.

Eterna Portfolio Company Spotlight:

Space and Time Launches on Mainnet

Space and Time, a decentralized data warehouse powering verifiable compute for smart contracts and AI models, has officially launched on mainnet. Built for high-speed query performance with cryptographic proof guarantees, Space and Time enables developers to run tamper-proof data analytics directly on-chain. Eterna Capital backed Space and Time early in its journey, supporting its mission to bring scalable, trustless data infrastructure to the Web3 ecosystem.