In July 2025, the ETH price on the Ethereum network surged nearly 50%. Investors focused their attention on stablecoins, asset tokenization, and institutional adoption - these are the core advantages that distinguish Ethereum as the oldest smart contract platform from its competitors.
The passage of the 'GENIUS Act' is a milestone for stablecoins and the entire crypto asset category. Although market structure-related legislation may take time to pass in Congress, US regulators can continue to support the digital asset industry through other policy adjustments, such as approving staking functions in crypto investment products.
In the short term, crypto asset valuations may experience consolidation, but we remain very optimistic about the asset class's prospects in the coming months. Crypto assets provide investors with an opportunity to engage with blockchain innovation while potentially offering some immunity to certain risks of traditional assets (such as ongoing USD weakness). Therefore, BTC, ETH, and many other digital assets are expected to continue attracting investor interest.
On July 18, President Trump signed the 'GENIUS Act', providing a comprehensive regulatory framework for US stablecoins. This marks the "end of the beginning" for the crypto asset category: public blockchain technology is moving from the experimental stage to the core of a regulated financial system. The debate about whether blockchain technology can bring practical benefits to mainstream users has ended, and regulators are now focusing on ensuring that the industry grows with appropriate consumer protection and financial stability mechanisms.
In July, the crypto market was elated by the passage of the 'GENIUS Act' and supported by favorable macroeconomic conditions. Stock market indices rose in most parts of the world, with fixed income market returns led by high-risk sectors such as US high-yield corporate bonds and emerging market bonds (see Chart 1). As market volatility decreased, related investment strategies performed quite well.
The FTSE/Grayscale Crypto Asset Market Index (a market-cap-weighted investable digital asset index) rose 15%, while Bitcoin's price grew by 8%. Ethereum's ETH was the star of the month, with its price surging 49% and accumulating a total increase of over 150% since its low point in early April.
Dubbed as 'The King's Return'
Ethereum is the largest smart contract platform by market cap and the infrastructure of blockchain finance. However, until recently, ETH's price performance was far behind Bitcoin and even lagged behind other smart contract platforms like Solana. This led some to question Ethereum's development strategy and its competitive position in the industry (see Chart 2).
The renewed enthusiasm for Ethereum and ETH may reflect the market's focus on stablecoins, asset tokenization, and institutional blockchain adoption - Ethereum's strengths (see Chart 3). For example, the Ethereum ecosystem, including its Layer 2 networks, carries over 50% of stablecoin balances and processes about 45% of stablecoin transactions (by US dollar value).
Ethereum is also home to about 65% of the total value locked in decentralized finance (DeFi) protocols and nearly 80% of tokenized US Treasury products. For many institutions building crypto projects, including Coinbase, Kraken, Robinhood, and Sony, Ethereum has been the network of choice.
The increased 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 payment industry through lower costs, faster settlement times, and higher transparency (for more background, see 'Stablecoins and the Future of Payments').
There are two types of stablecoin-related revenues: first, the net interest margin (NIM) earned by stablecoin issuers (such as Tether, Circle), and second, the transaction fees earned by the blockchain processing the transactions. Since Ethereum already holds a leading position in the stablecoin sector, its ecosystem seems poised to benefit from increased stablecoin adoption through higher transaction fees.
The same applies to tokenization (the process of bringing traditional assets on-chain) (for more background, see 'Public Blockchains and the Tokenization Revolution'). The current tokenized asset market is relatively small (around $12 billion) but has enormous growth potential. Tokenized US Treasuries are currently the largest tokenized asset class, with Ethereum being the market leader. In the alternative assets space, Apollo Global recently launched an on-chain credit fund in partnership with Securitize.
Moreover, the tokenized equity market, though small, 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.
ETP Fever and More Trends
Investors' interest in Ethereum brought significant net inflows to spot ETH exchange-traded products (ETP). In July, the net inflow of listed spot ETHETP in the United States was $5.4 billion, the largest single-month net inflow since these products were launched last year (see Chart 4).
Currently, ETHETP holds approximately $21.5 billion in assets, equivalent to nearly 6 million ETH, about 5% of the total circulating supply. Based on the CFTC's trader position report, we estimate that only $1-2 billion of ETHETP net inflows come from hedge funds' "basis trading", with the rest being long-term capital.
Some listed companies have also started accumulating ETH to gain token usage rights through equity instruments. The two largest "crypto fund management companies" holding ETH are Bitmine Emersion Technologies ($BMNR) and SharpLink Gaming ($SBET). These two companies collectively hold over 1 million ETH, with a total value of $3.9 billion.
The third listed company, BTCS ($BTCS), stated in late July that it plans to raise $2 billion through the issuance of common and preferred stocks for additional ETH purchases (BTCS currently holds about 70,000 ETH, valued at approximately $250 million). In addition to the net inflows of ETH ETP products, purchasing pressure from Ethereum enterprise fund management companies may have also driven price increases.
Moreover, Ethereum's share in the cryptocurrency derivatives market increased this month, indicating rising market speculation interest in the asset. In traditional futures listed on the Chicago Mercantile Exchange (CME), ETH futures open interest (OI) increased to around 40% of BTC futures open interest (Chart X). In perpetual futures contracts, ETH's open interest increased to around 65% of BTC's open interest. This month, ETH perpetual futures trading volume also exceeded BTC perpetual futures.
Despite ETH being the focus for most of July, Bitcoin investment products also continued to see steady investor demand. Net inflows for listed spot Bitcoin ETPs in the United States reached $6 billion, currently estimated to hold 1.3 million Bitcoins. Multiple listed companies have also expanded their Bitcoin fund management strategies. Market leader Strategy (formerly MicroStrategy) issued $2.5 billion in new preferred stock to purchase more Bitcoin.
Additionally, Bitcoin early pioneer and Blockstream CEO Adam Back announced the establishment of a new Bitcoin fund management strategy company - Bitcoin Standard Fund Management ($BSTR). The company will use Back and other early adopters' Bitcoin as capital and will raise equity. BSTR's transaction is very similar to the earlier SPAC transaction organized by Cantor Fitzgerald for Twenty One Capital - another large Bitcoin fund management strategy company supported by Tether and SoftBank.
Crypto Asset Boom
In July, valuations across crypto market sectors increased. From a crypto asset sector perspective, the best-performing sector was smart contracts (benefiting from ETH's 49% increase), while the worst-performing was the artificial intelligence sector, dragged down by the weakness of a few tokens (see Chart 6). During July, futures open interest and financing rates (leverage financing costs for top-tier long positions) for many crypto assets increased, indicating enhanced investor risk appetite and increased speculative long positions.
After experiencing strong returns, valuations may see some pullback or consolidation. The passage of the GENIUS Act is a significant positive for the crypto asset class, driving absolute and risk-adjusted returns. Congress is also considering crypto market structure legislation, with the House's CLARITY Act receiving bipartisan support on July 17. However, the Senate is reviewing its own market structure legislation version, with no significant progress expected before September. Therefore, legislative catalysts supporting crypto asset valuation increases may be limited in the short term.
Summary
Nevertheless, we remain very optimistic about the crypto asset outlook in the coming months. First, even without legislation, regulatory tailwinds exist. For example, the White House recently released a detailed report on digital assets, proposing 94 specific recommendations to support the US digital asset industry. Sixty of these are within regulatory agency jurisdiction (the remaining 34 require Congressional or joint Congressional and regulatory action). With regulatory support, crypto investment products (such as staking features or broader spot crypto ETPs) may attract new capital into the asset class.
Second, we expect the macroeconomic environment to continue favoring crypto assets. These assets provide investors an opportunity to engage with blockchain innovation while offering some immunity to certain traditional asset risks (such as ongoing USD weakness). In addition to crypto-related legislation passed in July, President Trump also signed the One Big Beautiful Bill Act, targeting massive federal budget deficits over the next decade.
He also explicitly expressed hope for the Federal Reserve to lower interest rates, emphasizing that a weaker dollar would benefit US manufacturing and increased tariffs on various products and trade partners. Massive budget deficits and lower real interest rates may continue to suppress dollar value, especially with implicit White House support. Scarce digital commodities like Bitcoin and ETH may benefit as a result, serving as partial hedging tools in portfolios facing ongoing dollar weakness risks.
