Original title: (July 2025: Ethereum Comes Alive)
Original source: Grayscale
Original translation: Plain Language Blockchain
In July 2025, the ETH price on the Ethereum network surged nearly 50%. Investors are focusing on stablecoins, asset tokenization, and institutional adoption—areas where Ethereum, as the oldest smart contract platform, differentiates itself from other competitors.
The passage of the (GENIUS Act) marks a milestone moment for stablecoins and the entire cryptocurrency asset class. While market structure-related legislation may still take time to pass in Congress, U.S. regulators can continue to support the development of the digital asset industry through other policy adjustments, such as approving staking features in crypto investment products.
In the short term, cryptocurrency asset valuations may experience consolidation, but we remain very optimistic about the prospects for this asset class in the coming months. Cryptocurrency assets provide investors with an opportunity to engage with blockchain innovation while potentially offering some immunity to certain risks associated with traditional assets (such as a persistently weak dollar). Therefore, Bitcoin, ETH, and many other digital assets are expected to continue to be favored by investors.
On July 18, President Trump signed the (GENIUS Act), providing a comprehensive regulatory framework for U.S. stablecoins. This marks the 'end of the beginning' for the cryptocurrency asset class: public blockchain technology is moving from the experimental stage to the core of the regulated financial system. The debate over whether blockchain technology can bring real benefits to mainstream users has concluded, and regulators have now shifted to ensuring that the industry grows while incorporating appropriate consumer protection and financial stability mechanisms.
In July, the crypto market was buoyed by the passage of the (GENIUS Act) and supported by favorable macro market conditions. Stock market indices rose in much of the world, and returns in the fixed income market were led by high-risk sectors, such as U.S. high-yield corporate bonds and emerging market bonds (see Chart 1). As market volatility decreased, related investment strategies also performed quite well.
The FT/Grayscale Crypto Asset Market Index (an investable digital asset index weighted by market capitalization) rose by 15%, while Bitcoin prices increased by 8%. Ethereum's ETH was the star of the month, with a price surge of 49%, accumulating over 150% gains since the low in early April.
Chart 1: Ethereum shines brightly in July with strong performance in the crypto asset market
Also known as 'the return of the king'
Ethereum is the largest smart contract platform by market capitalization and the infrastructure of blockchain finance. However, until recently, ETH's price performance lagged significantly behind Bitcoin and even other smart contract platforms like Solana. This has led some to start questioning Ethereum's development strategy and its competitive position in the industry (see Chart 2).
Chart 2: Ethereum has outperformed Bitcoin since May
The renewed enthusiasm for Ethereum and ETH may reflect the market's focus on stablecoins, asset tokenization, and institutional blockchain adoption—areas where Ethereum excels (see Chart 3). For example, including its Layer 2 networks, the Ethereum ecosystem holds over 50% of the stablecoin balances and processes about 45% of the stablecoin transactions (measured by dollar value).
Ethereum remains the home to about 65% of the locked value in decentralized finance (DeFi) protocols and nearly 80% of tokenized U.S. Treasury products. For many institutions building crypto projects, including Coinbase, Kraken, Robinhood, and Sony, Ethereum has been the preferred network.
Chart 3: Ethereum is the leading blockchain for stablecoins and tokenized assets
The increased adoption of stablecoins and tokenized assets will benefit Ethereum and other smart contract platforms. Grayscale Research believes that stablecoins are poised to disrupt certain areas of the global payments industry through lower costs, faster settlement times, and greater transparency (for more background, see (Stablecoins and the Future of Payments)).
There are two types of revenue related to stablecoins: one is the net interest margin (NIM) earned by stablecoin issuers (such as Tether and Circle), and the other is the transaction fees earned by the blockchains that handle transactions. Since Ethereum has established a leading position in the stablecoin space, its ecosystem seems poised to benefit from the increased transaction fees resulting from the growth in stablecoin adoption.
Tokenization (the process of putting traditional assets on the blockchain) is similarly relevant (for more background, see (Public Blockchain and the Tokenization Revolution)). The current market size for tokenized assets is small (approximately $12 billion), but the growth potential is immense. Tokenized U.S. Treasuries are currently the largest category of tokenized assets, and Ethereum is the market leader. In the alternative asset space, Apollo Global recently partnered with Securitize to launch an on-chain credit fund.
Additionally, while the tokenized equity market is small, it is growing: Robinhood has launched tokenized shares of private companies such as SpaceX and OpenAI, and eToro plans to tokenize stocks on Ethereum. Apollo's products are available on multiple blockchains, while Robinhood and eToro's tokenized equity products are within the Ethereum ecosystem.
The ETP boom and more trends
Investor interest in Ethereum has led to a significant net inflow into spot ETH exchange-traded products (ETPs). In July, the net inflow into U.S.-listed spot ETH ETPs reached $5.4 billion, the largest single-month net inflow since these products were launched last year (see Chart 4).
Currently, the ETH ETP holds approximately $21.5 billion in assets, equivalent to nearly 6 million ETH, accounting for about 5% of the total circulating supply. Based on the CFTC's Traders' Position Report data, we estimate that only $1 billion to $2 billion of the net inflow into ETH ETP comes from hedge funds' 'basis trading', with the remainder being long-term capital.
Chart 4: ETH ETP net inflows exceed $5 billion
Some listed companies have also begun accumulating ETH to gain access to tokens through equity instruments. The two companies with the largest ETH holdings among 'crypto fund management companies' are Bitmine Emersion Technologies ($BMNR) and SharpLink Gaming ($SBET). Together, these two companies hold over 1 million ETH, worth a total of $3.9 billion.
The third listed company, BTCS ($BTCS), announced in late July plans to raise $2 billion through the issuance of common and preferred stock to purchase additional ETH (BTCS currently holds approximately 70,000 ETH, worth about $250 million). In addition to the net inflows from ETH ETP products, buying pressure from Ethereum enterprise fund management companies may also have driven prices higher.
Moreover, Ethereum's share in the cryptocurrency derivatives market has increased this month, indicating rising speculative interest in the asset. In traditional futures listed on the Chicago Mercantile Exchange (CME), the open interest (OI) in ETH futures has grown to about 40% of that in Bitcoin (BTC) futures (Chart X). In perpetual futures contracts, the open interest in ETH has increased to about 65% of that in Bitcoin (BTC). This month, the trading volume of Ethereum perpetual futures also surpassed that of Bitcoin perpetual futures.
Chart 5: Increase in open interest in ETH futures
Although ETH received much attention for most of July, Bitcoin investment products also continued to see stable demand from investors. The net inflow into U.S.-listed spot Bitcoin ETPs reached $6 billion, with an estimated holding of 1.3 million Bitcoins. Several listed companies have also expanded their Bitcoin fund management strategies. Market leader Strategy (formerly MicroStrategy) issued $2.5 billion in new preferred stock to purchase more Bitcoin.
In addition, Bitcoin early pioneer and Blockstream CEO Adam Back announced the establishment of a new Bitcoin fund management strategy company—Bitcoin Standard Fund Management ($BSTR). The company will use Bitcoin from Back and other early adopters as capital and will raise equity. The trading of BSTR is very similar to the earlier SPAC (Special Purpose Acquisition Company) transaction organized by Cantor Fitzgerald for Twenty One Capital—another large Bitcoin fund management strategy company supported by Tether and SoftBank.
The cryptocurrency asset boom
In July, valuations across various segments of the crypto market saw an increase. From the perspective of the crypto asset sector, the best-performing segment was the smart contract sector (benefiting from ETH's 49% increase), while the worst performer was the artificial intelligence sector, weighed down by the specific weakness of a few tokens (see Chart 6). During July, the open interest and financing rates (the cost of financing leveraged long positions) of many crypto assets increased, indicating enhanced investor risk appetite and an increase in speculative long positions.
Chart 6: All crypto market segments rose in July
After experiencing strong returns, there may be some degree of correction or consolidation in valuations. The passage of the (GENIUS Act) is a significant positive for the cryptocurrency asset class, driving absolute and risk-adjusted returns. Congress is also considering legislative measures regarding the structure of the cryptocurrency market, with the House's (CLARITY Act) having bipartisan support and passing on July 17. However, the Senate is reviewing its own version of market structure legislation, and no significant progress is expected before September. Therefore, legislative catalysts supporting the rise in cryptocurrency asset valuations may be limited in the short term.
Summary
Nevertheless, we remain very optimistic about the prospects for cryptocurrency assets in the coming months. First, even without legislation, regulatory tailwinds still exist. For example, the White House recently released a detailed report on digital assets, proposing 94 specific recommendations to support the development of the U.S. digital asset industry. Of these, 60 fall under the jurisdiction of regulatory agencies (the remaining 34 require action from Congress or collaboration between Congress and regulators). With support from regulatory agencies, crypto investment products (such as staking features or broader spot crypto ETPs) could attract new capital into this asset class.
Second, we expect the macro environment to continue to favor cryptocurrency assets. These assets provide investors with an opportunity to engage with blockchain innovation while offering certain immunity to risks associated with traditional assets (such as a persistently weak dollar). In addition to the crypto-related legislation passed in July, President Trump also signed the (One Big Beautiful Bill Act), locking in large federal budget deficits for the next decade.
He also clearly expressed hope for the Federal Reserve to lower interest rates, emphasizing that a weaker dollar would benefit U.S. manufacturing and increase tariffs on various products and trading partners. Large budget deficits and lower real interest rates may continue to depress the value of the dollar, especially with implicit support from the White House. Scarce digital commodities such as Bitcoin and ETH may benefit from this and serve as partial hedging tools in portfolios facing the ongoing risk of a weak dollar.
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