Bitcoin may be the historical leader during bull runs in the crypto universe, but in 2025 Ethereum (ETH) has a unique set of factors that could position it as the protagonist of the cycle.

From the advancement of regulated stablecoins to the evolution of Layer-2 solutions, through technical upgrades and a clearer regulatory landscape following the GENIUS Act, Ethereum appears ready to assume a leadership role.

Just between mid-July and mid-August 2025, ETH went from around 3,000 USD to over 4,700 USD. And as we will see in this article, there are reasons to believe that this path will continue to rise.

Stablecoins: Ethereum's strategic ace

Ethereum is home to most of the market's stablecoins, including USDC and USDT in their ERC-20 version. With the approval of the GENIUS Act in the United States, these stablecoins gained regulatory clarity, something the sector had been waiting for years.

This new legal framework represents a profound change for the market, as it allows financial institutions, funds, and companies to operate with these assets without the legal uncertainty that previously deterred some institutional capital. This legalization tends to increase the institutional use of stablecoins, expanding the volume of on-chain transactions and strengthening the liquidity available in Ethereum-based DeFi protocols.

This movement not only directly benefits the ETH token, but also reinforces the ecosystem of applications, decentralized exchanges, and credit and liquidity solutions that rely on these stablecoins as infrastructure. In other words, the network that hosts most of the regulated liquidity in the market is in a position to reap the benefits of this legal advance.

Layer-2: scalability and competitiveness

Historically, one of the strongest criticisms of Ethereum was the high cost of transactions during times of high demand. This limitation restricted use cases and pushed some users towards competing blockchains with lower fees. However, in the last two years, Layer-2 solutions have radically changed this scenario.

Networks like Arbitrum, Optimism, Base, and zkSync offer much lower transaction fees and high speed, maintaining the inherited security of the main layer (Layer-1). This evolution not only improves the end-user experience but also opens up space for new types of decentralized applications that were previously economically unviable.

DeFi, for example, gains scale and efficiency, and sectors such as SocialFi and GameFi find fertile ground to attract mass users without bumping into cost barriers. The accelerated adoption of L2 also means that Ethereum can compete with rival blockchains not only in security and decentralization but also in speed and cost, something unthinkable just a few years ago.

The impact of the Dencun upgrade

Another key element for Ethereum's moment is the Dencun upgrade, implemented in 2024. With the introduction of proto-danksharding, the network significantly reduced the cost of transactions in Layer-2 solutions, making some operations cost only fractions of a cent. This change opens up a range of possibilities for use cases that depend on micropayments or frequent transactions, making previously impractical business models viable.

The practical effect is that the entire ecosystem becomes more competitive: DeFi protocols offer cheaper interactions, decentralized exchanges increase their efficiency, and sectors such as NFTs and on-chain games can operate with minimal fees, attracting users who previously stayed away due to costs. Additionally, by eliminating one of the main competitive advantages of other blockchains — low fees — Ethereum further strengthens its position as the market's standard infrastructure.

Regulatory 'green light' and network effect

The GENIUS Act not only provided clarity for the institutional use of stablecoins but also reinforced legal security for any company wishing to build on Ethereum. The natural consequence is that more traditional companies feel comfortable integrating on-chain solutions into their products and services.

This institutional confidence, combined with the enormous base of developers and users already present in Ethereum, enhances the so-called network effect. The more liquidity, applications, and users a network has, the more attractive it becomes for new participants, creating a growth cycle that is difficult for competitors to replicate.

Comparison with Bitcoin in the current cycle

Bitcoin remains the primary store of value in the crypto market, especially as a gateway for institutional capital via spot ETFs. However, Ethereum offers a much more versatile and programmable ecosystem.

It serves not only as an investment asset but also as infrastructure for stablecoins, DeFi protocols, NFTs, DAOs, and many other applications. This multifunctionality gives Ethereum an advantage in terms of potential percentage appreciation.

Moreover, ETH can be staked, allowing investors to earn passive income while maintaining their exposure to the asset, something Bitcoin does not offer. If BTC is the 'digital gold' of this market, Ethereum is the platform where much of the crypto economy actually happens.

Factors that could drive ETH above the market

Ethereum can benefit from several simultaneous vectors: the growing demand for regulated stablecoins, the consolidation of Layer-2 solutions, the expansion of DeFi, and the arrival of new corporate use cases.

It is also relevant to mention long-term narratives, such as the reduction of net ETH issuance after the transition to proof-of-stake and the potential deflationary effect introduced by EIP-1559, which burns part of the transaction fees. The influx of institutional capital, both directly into ETH and into derivative products and funds that use the network as infrastructure, can accelerate this movement.

Risks and challenges

Despite the promising scenario, Ethereum still faces considerable risks. Competition from other L1s like Solana and Avalanche is real and can attract some liquidity.

Another limiting factor could come from stricter regulations outside the United States, which could hinder institutional adoption. And, even with recent improvements, the network needs to continue evolving to maintain its scalability and competitiveness in the long term.

That is: it is not a 'sure rise' (as you should be wary every time someone claims so), there are factors that may limit future possibilities.

ETH leading the bull market: a plausible scenario

If current trends continue, Ethereum could not only keep pace with Bitcoin but also outperform it in percentage returns during this cycle. This does not mean it will immediately surpass BTC in market value (as the difference remains considerable), but it could offer a greater relative return for those who enter at the right time.

The great catalyst will be real utilization: the more stablecoins circulate, the more transactions occur, and the more projects arise, the greater the demand for ETH, both for use and for staking.

2025 is already the year of Ethereum

With unprecedented regulatory clarity, reduced costs after Dencun, accelerated expansion of Layer-2 solutions, and dominance in the stablecoin market, Ethereum is in a privileged position to lead the next bullish movement. While Bitcoin continues to be the main global store of value, Ethereum can establish itself as the infrastructure where most of the crypto economy takes place.

For the attentive investor, understanding this difference can be key to making the most of the 2025 cycle.

Have you already thought about all this regarding ETH?

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