• In July 2025, the price of Ethereum network ETH tokens increased by nearly 50%. Investors are focusing on stablecoins, asset tokenization, and institutional adoption rates—these are the key advantages that set this veteran smart contract platform apart from its peers.
• The passage of the (GENIUS Act) has become a watershed moment for stablecoins and the cryptocurrency asset class. Market structure legislation will still take a long time to pass in the U.S. Congress, but regulators can continue to support the digital asset industry through other policy adjustments—such as approving staking functions in crypto investment products.
• Crypto asset valuations may experience consolidation in the short term, but we believe that this asset class still has a bright outlook in the coming months. Crypto assets not only provide exposure to blockchain innovation but may also hedge against specific risks of traditional assets (including the risk of a continuously weakening dollar). For these reasons, Bitcoin, ETH, and many other digital assets are expected to continue to attract investor interest.
On July 18, 2025, President Trump signed into law the (GENIUS Act), which provides a comprehensive regulatory framework for stablecoins in the United States. To some extent, the enactment of this law can be seen as the 'end of the initial phase' for the cryptocurrency asset class: public chain technology is transitioning from an experimental phase to the core of a regulated financial system. The debate over whether blockchain can bring benefits to mainstream users has concluded, and regulators have shifted their focus to ensuring the development of the industry while establishing appropriate consumer protection and financial stability mechanisms.
The crypto market welcomes the passage of the (GENIUS Act), and the favorable macro market environment in July has also provided support. Stock indices in most regions of the world have risen, with returns in the fixed income market led by high-risk sectors, such as U.S. high-yield corporate bonds and emerging market bonds. Strategies benefiting from decreased volatility have also performed well. The FTSE / Grayscale Crypto Industry Market Cap Weighted Index—a market cap weighted index of investable digital assets—rose by 15%, while Bitcoin's price increased by 8%. The standout performer was Ethereum network's ETH, which saw a 49% increase in July, accumulating a rise of over 150% since the low point in early April.
Chart 1: Overall Performance of Crypto Assets in July is Stable, with ETH Shining
1. Please do not refer to it as a 'rebound'
Ethereum, as the largest smart contract platform by market capitalization, is a key piece of infrastructure for a blockchain-based financial system. However, until recently, ETH price performance has significantly lagged behind Bitcoin—and other smart contract platforms like Solana—raising questions in the market about its development strategy and competitive position in the industry (Chart 2).
Chart 2: ETH performance surpasses Bitcoin since May
The renewed enthusiasm for Ethereum and ETH in the market likely reflects the current focus on stablecoins, asset tokenization, and institutional blockchain applications—areas where Ethereum has a core advantage over other competing platforms (Chart 3). For instance, when including its layer 2 networks, the Ethereum ecosystem holds over 50% of stablecoin balances and processes approximately 45% of dollar-denominated stablecoin transactions. The platform also accounts for 65% of the total locked value in decentralized finance (DeFi) protocols and nearly 80% of tokenized U.S. Treasury products. For institutions like Coinbase, Kraken, Robinhood, and Sony, Ethereum remains the preferred underlying network for their cryptocurrency initiatives.
Chart 3: Ethereum is the leading blockchain for stablecoins and tokenized assets
The increase in adoption rates of stablecoins and tokenized assets will benefit both Ethereum and other smart contract platforms. Grayscale Research believes that stablecoins have the potential to reshape parts of the global payments industry through lower costs, faster settlement speeds, and higher transparency. This involves two types of revenue sources associated with stablecoins: first, the net interest margin (NIM) earned by stablecoin issuers (such as Tether, Circle), and second, transaction fees generated by the chains processing the transactions. Since Ethereum has already taken a leading position in the stablecoin space, its ecosystem is likely to gain higher transaction fee revenues as stablecoin adoption increases.
The same is true in the tokenization field—this process aims to bring traditional assets onto the blockchain. The current market size of tokenized assets is still small (around $12 billion), but growth potential is evident. Currently, tokenized U.S. Treasury bonds are the largest asset class, with Ethereum dominating the market in this area. In the alternative assets space, Apollo Global recently partnered with Securitize to launch an on-chain credit fund. Although tokenized equity is relatively small in scale, it is growing rapidly: Robinhood has launched tokenized stocks for private companies like SpaceX and OpenAI, and eToro has also announced plans for tokenized stocks on Ethereum. Apollo's products support multiple chains, whereas Robinhood and eToro's tokenized equity products will only be available within the Ethereum ecosystem.
2. ETP Fund Inflows and Their Subsequent Effects
Investor interest in Ethereum has driven significant net inflows into spot ETH exchange-traded products (ETPs). In July 2025, net inflows into U.S.-listed spot ETH ETPs reached $5.4 billion—the largest monthly net inflow since the product's launch last year (Chart 4). Currently, the total holdings of ETH ETPs are approximately $21.5 billion (equivalent to nearly 6 million ETH), accounting for about 5% of the total circulating supply of ETH. According to data from the Commodity Futures Trading Commission (CFTC) (trader position report), we estimate that only $1-2 billion of the net inflows reflect hedge funds' 'basis trading', while the remainder is pure long positions.
Chart 4: Net Inflows of ETH ETPs Exceed $5 Billion
Several publicly listed companies have also begun to increase their holdings of ETH, providing investors with token exposure through equity instruments. The two 'crypto asset treasury companies' holding the most ETH are Bitmine Emersion Technologies (stock code: BMNR) and SharpLink Gaming (stock code: SBET). These two companies collectively hold over 1 million ETH, valued at $3.9 billion. A third publicly listed company, BTCS (stock code: BTCS), announced in late July plans to raise $2 billion through the issuance of common and preferred stock to increase its ETH holdings (BTCS currently holds about 70,000 ETH, valued at approximately $250 million). In addition to the net inflows into ETH ETP products, the buying demand from corporate treasury companies may have also driven up ETH prices.
On the other hand, Ethereum's share in the crypto derivatives market has increased this month, indicating growing speculative interest in the asset. The open interest (OI) for ETH futures on the Chicago Mercantile Exchange (CME) has grown to about 40% of Bitcoin (BTC) futures OI (Chart 5). In terms of perpetual futures contracts, ETH's OI has grown to about 65% of BTC OI. This month, the trading volume of ETH perpetual futures also surpassed that of BTC perpetual futures.
Chart 5: Growth of ETH Futures Open Interest
Despite Ethereum's prominence in July, Bitcoin investment products maintained stable fund inflows. In July, net inflows into U.S.-listed spot Bitcoin ETPs reached $6 billion, with current estimated holdings of about 1.3 million BTC. Several publicly listed companies have also expanded their Bitcoin fund management strategies: industry leader Strategy (formerly MicroStrategy) issued $2.5 billion in new preferred stock to increase its Bitcoin holdings; early Bitcoin pioneer and Blockstream CEO Adam Back announced the establishment of a new Bitcoin fund management company, Bitcoin Standard Treasury Company (stock code: BSTR), which will use the Bitcoin held by Back and other early adopters as a capital base while conducting equity financing. BSTR's operating model is highly similar to the SPAC (Special Purpose Acquisition Company) transaction previously designed by Cantor Fitzgerald for Twenty One Capital—the latter was a Bitcoin fund management company supported by Tether and SoftBank.
3. The Boom of Altcoins
In July, valuations across various segments of the crypto market surged. From the perspective of crypto industry classification, the best performing segment was the smart contract sector (benefiting from ETH's 49% increase), while the weakest was the artificial intelligence sector (dragged down by the weakness of certain tokens) (Chart 6). During the month, the futures open interest and funding rates (the cost of financing leveraged long positions) of most crypto assets rose in sync, indicating an increase in investor risk appetite and speculative net longs.
Chart 6: Crypto Market Overall Rises in July
After experiencing a strong return cycle, there is always a risk of valuation correction or consolidation. Although the passage of the (GENIUS Act) has provided a significant catalyst for the cryptocurrency asset class (which explains the dual strong performance of absolute returns and risk-adjusted returns), the legislative drive may weaken in the short term. The U.S. Congress is currently deliberating on crypto market structure legislation (the House version, the (CLARITY Act), was passed with bipartisan support on July 17), but the Senate is still advancing its own version, and substantial progress is unlikely before September.
Nevertheless, we remain optimistic about the prospects of this asset class in the coming months. Firstly, regulatory dividends can be sustained without the need for legislation: the White House recently released a special report on digital assets with 94 specific development recommendations (60 of which fall under the jurisdiction of regulators, and the remaining 34 require cooperation from Congress or across departments). Secondly, regulators can enhance investment tools by approving staking functions and expanding the matrix of spot crypto ETP products, continuously guiding incremental funds into the market.
Additionally, we expect the macro environment to continue favoring crypto assets—these assets can provide exposure to blockchain innovation while avoiding specific risks of traditional assets. Apart from signing crypto-related legislation in July, President Trump also signed the (OBBBA Act) (One Big Beautiful Bill Act), which institutionalizes significant federal budget deficits for the next decade. Trump has also clearly stated a desire for the Federal Reserve to cut interest rates, emphasizing that a weaker dollar will benefit American manufacturers and imposing tariffs on various products and trade partners. The massive budget deficit and lower real interest rates may continue to suppress the value of the dollar, especially with the White House's tacit approval. Scarce digital commodities like Bitcoin and ETH may benefit from this environment and serve as a partial tool to hedge against the ongoing risk of a weakening dollar in investment portfolios.
