In July 2025, the price of ETH on the Ethereum network soared by nearly 50%. Investors focused on stablecoins, asset tokenization, and institutional adoption - these areas represent Ethereum's core advantages as the oldest smart contract platform, distinguishing it from other competitors.
The passage of the (GENIUS Act) is a milestone moment for stablecoins and the entire crypto asset class. While the passage of market structure-related legislation in Congress may take time, 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, crypto asset valuations may experience consolidation, but we remain very optimistic about the outlook for this asset class in the coming months. Crypto assets provide investors with the opportunity to engage with blockchain innovation while potentially offering some immunity to certain risks associated with traditional assets (such as the continued weakness of the 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 crypto asset class: public blockchain technology is moving from the experimental phase to the core of a regulated financial system. The debate over whether blockchain technology can bring tangible benefits to mainstream users has concluded, and regulators are now focused on ensuring the industry grows while incorporating appropriate consumer protections and financial stability mechanisms.
In July, the crypto market was buoyed by the passage of the (GENIUS Act) and also supported by favorable macro market conditions. Stock indices rose in most parts of the world, with high-risk sectors leading returns in the fixed income market, 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 FTSE/Grayscale Crypto Asset Market Index (an investable digital asset index weighted by market capitalization) rose by 15%, while Bitcoin's price increased by 8%. Ethereum's ETH was the star of the month, surging by 49%, with a cumulative increase of over 150% since the low in early April.
01
Also known as the 'Return of the King'
Ethereum is the largest smart contract platform by market capitalization and serves as the infrastructure for blockchain finance. However, until recently, ETH's price performance lagged far behind Bitcoin, even falling behind other smart contract platforms like Solana. This has led some to question Ethereum's development strategy and its competitive position in the industry.
The renewed enthusiasm for Ethereum and ETH may reflect the market's focus on stablecoins, asset tokenization, and institutional blockchain adoption - these are Ethereum's strengths (see Chart 3). For example, including its Layer 2 networks, the Ethereum ecosystem holds over 50% of stablecoin balances and processes about 45% of stablecoin transactions (by dollar value).
Ethereum is 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.
The increase in the adoption of stablecoins and tokenized assets will benefit Ethereum and other smart contract platforms. Grayscale Research believes that stablecoins have the potential 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 sources of revenue related to stablecoins: one is the net interest margin (NIM) earned by stablecoin issuers (like Tether, Circle), and the other is the transaction fees earned by the blockchain processing transactions. Since Ethereum has established a leading position in the stablecoin space, its ecosystem seems poised to benefit from the growth in stablecoin adoption through higher transaction fees.
Tokenization (the process of putting traditional assets on the blockchain) is likewise the case (for more background see (Public Blockchain and the Tokenization Revolution)). Currently, the market size for tokenized assets is relatively small (around $12 billion), but has huge growth potential. Tokenized U.S. Treasuries are currently the largest category of tokenized assets, with Ethereum as 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 like SpaceX and OpenAI, and eToro also 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.
02
ETP Boom and More Trends
Investor interest in Ethereum has led to significant net inflows into spot ETH exchange-traded products (ETPs). In July, the net inflow for 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, ETH ETPs hold 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 trader position report data, we estimate that only $1 billion to $2 billion of the net inflows into ETH ETPs came from hedge funds' 'basis trading', with the remainder being long-term capital.
Some listed companies have also begun accumulating ETH to obtain token usage rights through equity instruments. The two companies holding the most ETH among 'crypto fund management companies' are Bitmine Emersion Technologies ($BMNR) and SharpLink Gaming ($SBET). Together, these two companies hold over 1 million ETH, valued at $3.9 billion.
The third listed company, BTCS ($BTCS), announced in late July plans to raise $2 billion through the issuance of common and preferred stock for additional purchases of ETH (BTCS currently holds about 70,000 ETH, worth approximately $250 million). In addition to the net inflows of ETH ETP products, the buying pressure from Ethereum enterprise fund management companies may have also driven the price up.
Additionally, Ethereum has seen an increase in its share of the cryptocurrency derivatives market this month, indicating that market speculation interest in the asset is rising. In traditional futures listed on the Chicago Mercantile Exchange (CME), the open interest (OI) for ETH futures has increased to about 40% of the open interest for Bitcoin (BTC) futures (Chart X). In perpetual futures contracts, the open interest for ETH has risen to about 65% of that for Bitcoin (BTC). This month, the trading volume of Ethereum perpetual futures also surpassed that of Bitcoin perpetual futures.
Despite ETH receiving much attention for most of July, Bitcoin investment products also continued to see steady demand from investors. The net inflow for spot Bitcoin ETPs listed in the U.S. 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 $2.5 billion in new preferred shares to buy more Bitcoin.
Additionally, Bitcoin early pioneer and Blockstream CEO Adam Back announced the establishment of a new Bitcoin fund management strategy company - Bitcoin Standard Fund Management ($BSTR). The company will use Back's and other early adopters' Bitcoins as capital and will raise equity. The BSTR transaction 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.
03
Crypto 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 performer was the smart contract sector (benefiting from a 49% increase in ETH), while the worst performer was the artificial intelligence sector, dragged 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 rose, indicating that investor risk appetite has increased and speculative long positions have increased.
After experiencing strong returns, valuations may see a degree of correction or consolidation. The passage of the (GENIUS Act) is a significant positive development for the crypto asset class, driving absolute and risk-adjusted returns. Congress is also considering legislation on crypto market structure, with the House's (CLARITY Act) having received bipartisan support and passed on July 17. However, the Senate is reviewing its version of market structure legislation, and no significant progress is expected before September. Therefore, in the short term, there may be fewer legislative catalysts supporting the rise in crypto asset valuations.
