The Rise of Ethereum: A Review of the Crypto Market in July 2025

In July 2025, the price of Ethereum ( ETH ) surged nearly 50%, becoming the focus of the crypto market. Investors' attention is concentrated on stablecoins, asset tokenization, and institutional adoption, which are precisely the core advantages of Ethereum as one of the earliest smart contract platforms.

Recent legislation has made significant breakthroughs for stablecoins and the entire crypto asset category. Although market structure-related legislation may take some time to pass in Congress, 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, the valuation of crypto assets may experience consolidation, but the outlook for this asset class in the coming months remains optimistic. Crypto assets provide investors with the opportunity to engage with blockchain innovation while potentially offering some resilience against the risks of certain traditional assets. Therefore, Bitcoin, Ether, and other digital assets are expected to continue to be favored by investors.

On July 18, the signing of an important bill provided a comprehensive regulatory framework for stablecoins in the United States. This marks the entry of the crypto asset class into a new phase: public blockchain technology is moving from the experimental stage to the core of a regulated financial system. The debate over whether blockchain technology can bring real benefits to mainstream users has concluded, and regulators have now turned to ensuring that the industry grows while incorporating appropriate consumer protection and financial stability mechanisms.

In July, the crypto market was inspired by the passage of legislation and also benefited from favorable macro market conditions. Stock market indices rose in most regions of the world, while returns in the fixed income market were led by high-risk sectors such as U.S. high-yield corporate bonds and emerging market bonds. As market volatility decreased, related investment strategies also performed quite well.

The crypto market index rose by 15%, and the price of Bitcoin increased by 8%. Meanwhile, Ethereum's ETH became the star of the month, with a price surge of 49%, accumulating a growth of over 150% since the low point in early April.

Advantages of Ethereum

Ethereum is the largest smart contract platform by market value and serves as the infrastructure for blockchain finance. Recently, the price of ETH has significantly outperformed Bitcoin and even surpassed other smart contract platforms like Solana. This has prompted the market to re-evaluate 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. For example, including its Layer 2 network, the Ethereum ecosystem holds over 50% of the stablecoin balance and processes about 45% of stablecoin transactions (measured by dollar value).

Ethereum is still 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, Ethereum has always been the network of choice.

The adoption of stablecoins and tokenized assets will benefit Ethereum and other smart contract platforms. Stablecoins are expected to disrupt certain areas of the global payments industry with lower costs, faster settlement times, and greater transparency.

The income related to stablecoins mainly comes from two aspects: first, the net profit margin earned by stablecoin issuers, and second, the transaction fees earned by the blockchain processing the transactions. As Ether has already taken a leading position in the stablecoin sector, 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) also shows great potential. The current market size for tokenized assets is approximately $12 billion, but there is significant growth potential. Tokenized U.S. Treasuries are currently the largest category of tokenized assets, while Ethereum is the market leader. In the alternative asset space, some large institutions have recently launched on-chain credit funds.

In addition, the tokenized equity market, although small, is growing: some platforms have launched tokenized shares of private companies, and there are also platforms planning to tokenize stocks on Ethereum. Most of these products operate within the Ethereum ecosystem.

ETP Trend and Market Trends

Investor interest in Ethereum has led to significant net inflows into spot ETH exchange-traded products (ETPs). In July, net inflows into U.S.-listed spot ETH ETPs reached $5.4 billion, marking the largest single-month net inflow since these products were launched last year.

Currently, ETHETP holds approximately $21.5 billion in assets, equivalent to nearly 6 million ETH, accounting for about 5% of the total circulation. Based on trader position report data, we estimate that only $1 billion to $2 billion of the net inflow into ETHETP comes from hedge funds' "basis trading," with the remainder being long-term capital.

Some listed companies have also begun to accumulate Ether in order to gain the right to use tokens through equity instruments. The two largest "crypto asset management companies" holding Ether together own more than 1 million Ether, with a total value of 3.9 billion USD. Another listed company stated in late July that it plans to raise 2 billion USD through the issuance of common and preferred stock for additional purchases of Ether. In addition to the net inflows from Ether ETP products, the buying pressure from these corporate asset management companies may also have driven up prices.

In addition, Ethereum's share in the cryptocurrency derivatives market has increased this month, indicating a rise in speculative interest in the asset. In traditional futures, the open interest of ETH futures has risen to about 40% of that of Bitcoin futures. In perpetual futures contracts, the number of open contracts for ETH has increased to approximately 65% of the open contracts for Bitcoin. This month, the trading volume of Ether perpetual futures also surpassed that of Bitcoin perpetual futures.

Despite ETH being in the spotlight for most of July, Bitcoin investment products have also continued to see stable demand from investors. The net inflow of spot Bitcoin ETPs listed in the United States reached $6 billion, with an estimated holding of 1.3 million Bitcoins. Several listed companies have also expanded their Bitcoin fund management strategies. The market leader issued $2.5 billion in new preferred stock to purchase more Bitcoins.

In addition, an early pioneer of Bitcoin has announced the establishment of a new Bitcoin fund management strategy company. This company will use the Bitcoin of early adopters as capital and will raise equity. This is very similar to the SPAC (Special Purpose Acquisition Company) deal organized by some financial institutions for another large Bitcoin fund management strategy company.

Crypto Asset Market Overview

In July, the valuations of various sectors in the crypto market increased. 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 special weakness of a few tokens. During July, the open interest and financing rates (the cost of financing leveraged long positions) of many crypto assets rose, indicating an increased risk appetite among investors and an increase in speculative long positions.

After experiencing strong returns, valuations may see some degree of correction or consolidation. The recently passed bill is a significant boon for the crypto asset class, driving both absolute and risk-adjusted returns. Congress is also considering legislation on the structure of the crypto market, with a House bill 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, in the short term, there may be fewer legislative catalysts supporting the rise in valuations of crypto assets.

Outlook

Nevertheless, the outlook for crypto assets remains optimistic in the coming months. First, even in the absence of legislation, the regulatory environment is still improving. 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. With the support of regulatory agencies, crypto investment products (such as staking features or broader spot crypto ETPs) may attract new capital into this asset class.

Secondly, the macro environment is expected to continue favoring crypto assets. These assets provide investors with the opportunity to engage with blockchain innovation while having a certain immunity to some risks associated with traditional assets, such as the ongoing weakness of the dollar. In addition to the crypto-related legislation passed in July, a bill was also signed to lock in large federal budget deficits for the next decade.

The government has also clearly stated its desire to lower interest rates, emphasizing that a weaker dollar will benefit manufacturing and has increased 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 when receiving implicit support from the government. Scarce digital commodities like Bitcoin and Ether may thus benefit and serve as a partial hedge in portfolios facing the ongoing risk of dollar weakness.