Bitcoin pioneered the cryptocurrency era in 2009, drawing investors, regulators, and tech enthusiasts with its peer-to-peer blockchain network. Its price soared from US$0.06 in July 2010 to over US$120,000 last fall on major exchanges. However, since the U.S. Genius Act passed on July 18, 2025, Bitcoin’s value has plunged about 40 percent to under US$70,000.
The Rise of Stablecoins as Payment Alternatives
The Genius Act established a clear regulatory framework for payment stablecoins, requiring issuers to maintain full reserve backing and undergo regular audits. This transparency boosts investor confidence and positions stablecoins as stable, reliable options for digital payments, unlike Bitcoin’s volatility.
Introduced in 2014, stablecoins differ from Bitcoin by pegging their value to traditional assets like fiat currencies, minimizing price swings. Data from Visa’s Onchain Analytics Dashboard and BitInfoCharts shows stablecoin transaction volumes surging since the Act’s passage, while Bitcoin transactions dropped over 20 percent monthly.
Direct Competition in Anonymous Transactions
Bitcoin initially appealed for three reasons: innovative blockchain use, rivalry to fiat money, and quasi-anonymous digital payments bypassing cash hassles. Its untraceable nature attracted users seeking privacy from regulators.
Stablecoins now rival Bitcoin in this niche, offering similar anonymity with far less volatility. Analysis indicates 60 to 85 percent of Bitcoin’s illegal transaction volume has shifted to stablecoins, a trend likely to accelerate as stablecoin adoption grows.
Bitcoin’s Shift to Speculation Only
Stablecoins target Bitcoin’s transactional users, leaving Bitcoin primarily for speculation. This mirrors the 1720 South Sea Bubble, where hype around a trade monopoly faded, crashing prices despite speculative buying.
Economists Paul Beaudry, a University of British Columbia professor and former Bank of Canada Deputy Governor, and Amartya Lahiri, Royal Bank Professor at UBC’s Vancouver School of Economics, highlight that Bitcoin’s value hinges on its anonymous payment utility. Strong stablecoin regulation could erode this edge, stripping Bitcoin’s core narrative and growth potential.
