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Bitcoin smashed through $111,500 this week while the GENIUS Act passed a crucial Senate vote, Ethereum unveiled its ZK scaling miracle, and the U.S. Treasury struggled to find bond buyers. Here's everything that happened in crypto's biggest week of 2025.
Key Takeaways
- Bitcoin hit a new all-time high of $111,512, up 8% on the week despite being a $2 trillion asset
- The GENIUS Act stablecoin bill passed a key Senate vote 69-32, with 16 Democrats joining Republicans
- U.S. Treasury auctions showed "tepid demand" as 30-year bond yields spiked above 5% for the first time since 2007
- Ethereum's real-time ZK proving breakthrough could scale Layer 1 to 10,000 TPS within 3-6 years
- Solana proposed Beam Chain consensus upgrade promising 100-150ms block finalization
- Cetus protocol on Sui suffered a $200M hack, with attackers converting stolen funds to ETH
- Texas became the first state to create a strategic Bitcoin reserve for assets over $500B market cap
- ETH supply on exchanges dropped below 4.9%, creating potential for increased price volatility
- SEC's Hester Peirce declared "most currently existing crypto assets are not securities"
Stanley Druckenmiller's Crypto Basket Strategy
Before we dive into the week's developments, here's some perspective on portfolio concentration from legendary investor Stanley Druckenmiller: "My idea of risk control is a little non-conventional. I like putting all my eggs in one basket and then watching the basket very carefully."
David Hoffman admits his liquid net worth is about 95% concentrated in the top two crypto assets, and honestly? Druckenmiller would probably approve. When you find assets you have genuine conviction in, diversification can actually increase your risk if it forces you into investments you don't understand.
The key insight from Druckenmiller is that most portfolios make 70-80% of their annual returns from just 2-3 ideas, even when they hold 30-40 positions. So why not concentrate on those highest-conviction plays and watch them carefully?
- Concentration requires deep research and conviction, not just blind betting
- Having multiple asset classes (like crypto, equities, bonds) gives you options when opportunities arise
- The present is already priced in – you need to think 18-24 months ahead
- "The obvious is obviously wrong" – conventional wisdom leads to conventional returns
This philosophy makes sense in crypto, where the technological and monetary transformations we're witnessing could be generational wealth-building opportunities. Just make sure you're actually watching that basket carefully.
Bitcoin Pizza Day Hits Different at $111K
Speaking of perspective, this week was Bitcoin Pizza Day – the anniversary of the first real-world Bitcoin transaction on May 22, 2010. Some guy named Laszlo convinced someone to order him two Papa John's pizzas in exchange for 10,000 bitcoins.
Those two pretty mediocre-looking pizzas (one cheese, one veggie with olives and peppers) are now worth $1.2 billion. It's funny that Bitcoin's first use case wasn't as a store of value – it was actually as a medium of exchange for pizza.
The irony is perfect. Here we are 15 years later with Bitcoin hitting new all-time highs above $111,000, and those pizzas represent the most expensive meal in human history. But that transaction proved Bitcoin could work as actual money, even when there was no established price or market.
- The transaction established Bitcoin's viability as a payment system
- It created the first real-world price discovery for Bitcoin
- Today those 10,000 bitcoins would represent serious institutional treasury holdings
- The story shows how far we've come from experimental internet money to $2 trillion asset
What's particularly wild is that Bitcoin is up 8% this week alone. That's massive price movement for an asset this size. When trillion-dollar assets start moving like this, it usually means something fundamental is shifting in the market.
The GENIUS Act Clears Its Biggest Hurdle
The landmark stablecoin bill just passed its most important test. The Senate voted 69-32 to advance the GENIUS Act, with 16 Democrats crossing party lines to support it. That's not just bipartisan – that's overwhelming support for crypto infrastructure.
Senator Bill Hagerty laid out exactly why this matters: "We're modernizing the payment system here in America. We're going to put America at the forefront of innovation rather than having America behind as the caboose."
The bill creates federal standards for stablecoin issuers that are actually reasonable. Stablecoins must be fully backed 1:1 by liquid assets like cash and short-term treasuries. No more Terra Luna algorithmic nonsense. Issuers must regularly disclose reserves, and coin holders get priority in bankruptcy proceedings.
- Banks, credit unions, and registered non-bank entities can issue stablecoins
- Large tech companies like Meta and Google are explicitly excluded from issuing
- The bill separates tech from finance, opposite of China's centralized approach
- Current $250 billion stablecoin market could expand into the trillions with clarity
What's fascinating is how this positions America strategically. Hagerty points out that by the end of this decade, stablecoin issuers could be the largest holders of U.S. treasuries globally. Instead of relying on foreign governments to buy American debt, we'd have benign private companies doing it.
The opposition came exactly where you'd expect. Elizabeth Warren looked absolutely furious during the vote, arms crossed, staring down colleagues who dared support crypto innovation. Chuck Schumer also opposed, which is surprising since he used to be the pro-crypto Democrat.
But here's the beautiful part: the industry didn't lobby against this bill. Nobody from crypto was calling senators saying "please don't do this." The only opposition came from politicians who want centralized control and traditional banks terrified of competition.
Treasury Auctions Show Cracks in Dollar Dominance
While crypto was celebrating regulatory wins, the U.S. Treasury was struggling with a different problem: nobody wants to buy their bonds. This week's auction for 20-year treasuries showed "tepid demand," pushing yields above 5% for the first time since 2007.
Think about that. The government is now paying higher interest rates than most people's mortgages. When you owe $36 trillion and interest rates spike, the math gets ugly fast. Every percentage point increase in rates means hundreds of billions more in annual interest payments.
The fundamental issue is what David calls the broken feedback loop. America used to print money, buy foreign goods, and those dollars would return when foreign countries bought our bonds. But that last step isn't happening anymore. Instead, they're buying gold and Bitcoin.
- 30-year treasury yields spiked above 5%, highest since 2007
- Foreign buyers are increasingly reluctant to finance American debt
- Trump's tariff policies undermined international confidence in dollar stability
- Capital is flowing to alternatives like gold (all-time highs) and Bitcoin
This creates a perfect storm for crypto adoption. When the world's reserve currency starts looking unstable, people need alternatives. Bitcoin and other crypto assets offer exactly that – programmable, censorship-resistant money that can't be debased by political decisions.
The irony is that the GENIUS Act might actually help solve this problem. If stablecoin issuers become major treasury buyers, it creates new demand for government debt from private sector entities rather than foreign governments.
Ethereum's ZK Miracle Could Change Everything
The most technically exciting development this week came from Ethereum's research community. Justin Drake and Uma from Succinct announced that real-time ZK proving is basically here, and it could transform Ethereum's Layer 1 into something unrecognizable.
Here's the simple explanation: right now, every blockchain node has to re-execute every transaction to verify it's correct. It's like having thousands of people each solve the same Sudoku puzzle instead of just checking that someone else solved it correctly.
With real-time ZK proving, only one computer has to do the work, then everyone else just verifies the proof. This is way more efficient, but it only works if you can generate proofs faster than block times.
Ethereum has 12-second blocks. They can now prove 99% of blocks in under 13 seconds. That's the breakthrough that unlocks everything else.
- Real-time proving enables 100x throughput scaling on Ethereum Layer 1
- The Layer 1 becomes an "enshrined ZK rollup" with massive capacity increases
- Cross-chain composability improves dramatically across the entire ecosystem
- This could reach 10,000 transactions per second within 3-6 years
The roadmap is actually achievable too. They don't need one big bang upgrade. Dankrad's plan involves increasing gas limits 3x per year, which compounds quickly. Even if it takes 4-5 years instead of 3, that's still transformational scaling.
What's particularly elegant is how this creates a gravity well for other rollups. When the Layer 1 becomes a native rollup with perfect interoperability, why would you want to be an isolated chain? Everything gets pulled toward the center, creating the "United Chains of Ethereum" vision.
Even Bitcoin skeptic Eric Wall tweeted "Ethereum is saved." That's not hyperbole – this ZK miracle could be the technical breakthrough that makes Ethereum's long-term scaling plan actually work.
Solana's Beam Chain Pushes Speed Limits
Not to be outdone, Solana announced their own major upgrade proposal this week. Beam Chain isn't just an incremental improvement – it's a complete rebuilding of Solana's consensus layer with two new components: Voter and Rotor.
Voter finalizes blocks in 100-150 milliseconds, often in just a single vote round. That's insanely fast. Rotor creates a lighter, faster gossip layer that relays blocks with fewer hops and better bandwidth allocation.
The goal is moving Solana even closer to actual web2 latency territory. We're talking about consensus at literally the speed of light, enabling real-time trading, gaming, and payments that feel instant.
- 100x speed improvement in consensus finalization
- Works with just 80% of stake online, improving network resilience
- Targets second half of 2025 for implementation alongside Fire Dancer client
- Potential trade-offs around validator centralization being debated
The criticism is predictable: some argue this will consolidate stake weight into even fewer validators, potentially compromising decentralization. As few as seven validators might be able to attack the network under some scenarios.
But here's the thing – Solana has always optimized for performance over maximum decentralization. They're building for applications that need web2-level responsiveness, and this upgrade doubles down on that strategy.
The real competition emerging is around real-world assets. Ethereum dominates with $10 billion in tokenized assets, but Solana is making moves. Kraken just announced they're launching tokenized equities on Solana through their partnership with Backed, not on Ethereum.
The Sui Hack That Proved ETH's Monetary Properties
The biggest hack in recent memory hit Sui's Cetus protocol this week, draining $200 million from liquidity pools. Tokens lost 90% of their value as attackers converted everything they could into raw SUI tokens.
But here's where it gets interesting for the broader valuation debate. The hackers took their stolen SUI and immediately started buying ETH, moving funds to Ethereum for safekeeping. When criminals want to protect stolen wealth, they don't choose the chain they just exploited – they choose Ethereum.
Even more telling, Sui validators censored the hacker's transactions at the Layer 1 level. They literally froze remaining funds to prevent further theft. That might seem reasonable from a user protection standpoint, but it completely undermines Sui's monetary credibility.
- $200M hack on Sui's largest DEX created massive liquidity crisis
- Hackers converted stolen funds to ETH and moved to Ethereum
- Sui validators censored transactions, proving the network is censorable
- This demonstrates the difference between "good money" and "bad money"
Compare this to how hackers behave on other networks. Sometimes they leave Ethereum for Bitcoin, sometimes they come to Ethereum from other chains. But they consistently choose the most censorship-resistant options available.
This perfectly illustrates the REV vs. RSOV valuation debate. Sui might generate impressive revenue from transaction fees, but when push comes to shove, sophisticated actors don't trust it as a store of value. They want Ethereum or Bitcoin – assets that prioritize property rights over convenience.
The $60 million in ETH purchases by the hackers doesn't show up in any DCF calculation, but it's pure demand for Ethereum as censorship-resistant money. That's the store of value use case that REV analysis completely misses.
Texas Goes Full Bitcoin Maxi (Sort Of)
Texas became the first state to create an official strategic Bitcoin reserve this week, but the details are more interesting than the headlines. This isn't just a Bitcoin fund – it's for any crypto asset with a market cap above $500 billion.
Right now that's only Bitcoin at $2.3 trillion. But Ethereum at $320 billion could qualify if it hits $4,000. That's actually a pretty reasonable threshold that focuses on the most established, liquid assets while leaving room for growth.
The symbolism matters as much as the policy. Texas is positioning itself as the crypto-friendly alternative to hostile jurisdictions. When states start building strategic reserves, it validates crypto as a legitimate treasury asset.
- Dedicated fund managed by state controller for crypto investments
- $500B market cap threshold currently includes only Bitcoin
- Ethereum could qualify with modest price appreciation
- First state-level strategic reserve sets precedent for others
This comes as Galaxy Digital also listed on NASDAQ this week, giving Mike Novogratz another major milestone. He's now been part of three major finance IPOs: Goldman Sachs, Fortress, and Galaxy. The guy knows how to pick his spots.
Galaxy is also actively working with the SEC to tokenize their stock on Ethereum. Novogratz says it's "going really well" and they want to do it "as soon as possible." That would be a major legitimacy milestone for tokenized securities.
The SEC Keeps Being Surprisingly Awesome
The regulatory transformation continues to amaze. Hester Peirce gave another speech this week declaring "most currently existing crypto assets are not securities." She specifically said crypto assets used for consumption rather than investment shouldn't be subject to federal securities laws.
That means NFTs, collectibles, and utility tokens are basically in the clear. This is stuff the crypto community has been saying for years, but now it's official SEC policy posted on their website.
The agency is also finally going after actual fraudsters instead of legitimate projects. They just charged Unicoin executives with $100 million in securities fraud. This was the fake copycat trying to confuse people into thinking it was Uniswap.
- Hester Peirce declares most crypto assets aren't securities
- NFTs and utility tokens explicitly cleared from securities laws
- SEC prosecuting actual fraud while supporting legitimate innovation
- Complete 180-degree shift from Gensler administration
Meanwhile, the DOJ is investigating the Coinbase data breach, though it appears they're working with Coinbase to catch the criminals rather than investigating Coinbase itself. The breach has been ugly, with users getting scam calls and texts for months.
There's an ongoing debate about how much is Coinbase's fault versus the inevitable result of forcing crypto companies to collect massive amounts of customer data through KYC/AML requirements. Either way, it's a mess that needs cleaning up.
What This All Means Going Forward
We're witnessing multiple converging trends that could reshape crypto adoption dramatically. Regulatory clarity through the GENIUS Act, technical breakthroughs in scaling, traditional finance recognition through state reserves and NASDAQ listings, and growing concerns about dollar stability.
The ETH supply on exchanges dropping below 4.9% suggests reduced selling pressure and potential for increased volatility. With only about 15% of ETH actively trading, significant buying pressure could move prices substantially.
Bitcoin dominance sits at 63%, and the big question is whether we'll see alt season rotation. Historical patterns suggest ETH/BTC ratio improvements often signal broader alt season beginnings. Chris Burniske argues ETH is best positioned to benefit from the GENIUS Act given its stablecoin infrastructure and DeFi ecosystem.
The narrative is shifting from "crypto as speculation" to "crypto as infrastructure." Stablecoins become payment rails, Layer 1s become settlement layers, and the entire stack starts looking more like essential financial infrastructure than experimental technology.
Stanley Druckenmiller's advice about thinking 18-24 months ahead feels particularly relevant. The present momentum is already priced in. The question is what the world looks like when real-time ZK proving is live, stablecoins have federal standards, and treasury yields are even higher.
The obvious trade is obviously wrong, as Druckenmiller says. But sometimes the non-obvious trade is that the obvious fundamentals are actually correct, just earlier than the market realizes.
