Ether is fast becoming the crypto market’s breakout performer this summer — and for good reason. A mix of favorable policy updates, rising demand for blockchain-based financial tools, and investor momentum has positioned Ethereum to potentially challenge its all-time high in the months ahead.

Despite a modest pullback on Friday, ether’s strong outperformance relative to bitcoin BTCUSD +0.15% over the past month has highlighted growing investor enthusiasm around several key themes in the crypto space this summer. Analysts said the momentum, supported by a wave of regulatory developments, could continue to push ether’s price higher.

Ether’s ETHUSD +1.38% next key resistance level sits at $4,100 from the technical perspective, and it has the potential to rise above its record high of $4,865.81 later this year, said John Glover, chief investment officer at crypto lending firm Ledn.

Much of ether’s recent strength stems from rising investor interest in dollar-backed stablecoins, or cryptocurrencies that are supposed to maintain a 1:1 peg to the U.S. dollar, as well as tokenization, which is the process of moving financial assets like bonds and equities onto the blockchain. Confidence is also growing in decentralized finance, or DeFi, which enables financial services to operate without relying on traditional intermediaries such as banks or brokers.

“Ether is at the center of stablecoins and tokenization, which is the emergent narrative that’s really important in crypto,” said Matt Hougan, chief investment officer at Bitwise Asset Management. “It’s hitting on all cylinders. I don’t see why it wouldn’t go higher.”

The narrative has gained traction with recent policy developments. In July, the U.S. enacted legislation regulating stablecoins. On Thursday, the Securities and Exchange Commission unveiled a new policy agenda, referred to as “Project Crypto,” that included updating rules to support bringing securities onto the blockchain. A day earlier, a report from President Donald Trump’s crypto working group outlined recommendations aimed at safeguarding the DeFi sector.

Such developments point to significant opportunities for Ethereum, which remains the leading platform supporting much of this activity. The network hosts roughly 59.5% of the total value locked in DeFi, supports 50% of the stablecoin market by value and holds about 54.8% of the market share in tokenization, according to data provider DefiLlama.

Ether has surged 43% over the past month and is up 6.6% so far this year, according to FactSet data. On Friday, however, it slipped 4.4% to $3,572 after a weaker-than-expected U.S. jobs report weighed on assets viewed as risky. By comparison, bitcoin gained 6.4% over the past month and is up 22.4% year to date. It declined 2% on Friday to $112,357.

Additional tailwinds for ether include continued inflows into ether exchange-traded funds and purchases from companies looking to add the crypto to their treasurys, according to Joel Kruger, market strategist at LMAX Group.

BlackRock’s iShares Ethereum Trust exchange-traded fund ETHA -6.23% rose 51% over the four weeks through the end of last week, marking its strongest rolling four-week performance since the period ending May 16, according to Dow Jones Market Data. However, the ETF was down 2% so far this week, putting it on track to snap a four-week winning streak.