The Rise of Ethereum: Stablecoins and Asset Tokenization Lead a New Chapter in the Crypto Market

In July 2025, the price of ETH on the Ethereum network surged nearly 50%, drawing investors' attention to stablecoins, asset tokenization, and institutional adoption. These are the core advantages that set Ethereum apart as one of the earliest smart contract platforms from its competitors.

The passage of the GENIUS Act is a milestone moment for stablecoins and the entire crypto asset class. Although it may take time for market-structure-related legislation 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 asset classes in the coming months remains very optimistic. Crypto assets provide investors with the opportunity to engage with blockchain innovation, while potentially possessing a degree of immunity to certain risks associated with traditional assets. Therefore, Bitcoin, Ether, and many other digital assets are expected to continue to be favored by investors.

On July 18, Trump signed the GENIUS Act, providing a comprehensive regulatory framework for stablecoins in the United States. This marks the "end of the beginning" for the crypto asset class: 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 is over, 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 elated by the passage of the GENIUS Act, while also being supported by favorable macro market conditions. Stock market indices in most parts of the world rose, with returns in the fixed income market 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 FT/Grayscale Crypto Asset Market Index (an investable digital asset index weighted by market capitalization) rose by 15%, while the price of Bitcoin grew by 8%. Meanwhile, Ethereum's ETH became the star of the month, with a price surge of 49%, accumulating a total increase of over 150% since the low point in early April.

The Advantages of Ethereum Reemerged

Ethereum is the largest smart contract platform by market capitalization and serves as the infrastructure for blockchain finance. However, until recently, the price performance of ETH has been far inferior to that of Bitcoin and has even lagged behind other smart contract platforms. This has led some to begin questioning 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 precisely the strengths of Ethereum. 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 in USD value).

Ethereum is still the home of about 65% of the locked value in decentralized finance (DeFi) protocols and nearly 80% of the tokenized U.S. Treasury products. For many institutions building crypto projects, including several well-known companies, Ethereum has always been the preferred network.

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 through lower costs, faster settlement times, and greater transparency.

There are two types of income related to stablecoins: the net interest margin (NIM) earned by stablecoin issuers, and the transaction fees earned by the blockchain processing the transactions. As Ethereum has taken a leading position in the stablecoin sector, its ecosystem seems poised to benefit from higher transaction fees due to the growth in stablecoin adoption.

Tokenization (the process of putting traditional assets on the blockchain) is no different. The current market size for tokenized assets is relatively small (around $12 billion), but the growth potential is enormous. Tokenized U.S. Treasury bonds are currently the largest category of tokenized assets, with Ethereum as the market leader. In the alternative asset space, some large financial institutions are launching on-chain credit funds.

In addition, the tokenization equity market, though small, is growing: some platforms have launched tokenized shares of private companies, and others plan to tokenize stocks on Ethereum. These products mainly operate within the Ethereum ecosystem.

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 into spot ETH ETPs listed in the U.S. reached $5.4 billion, marking the largest single-month net inflow since these products were launched last year.

Currently, ETHETP holds assets of about $21.5 billion, equivalent to nearly 6 million ETH, accounting for about 5% of the total circulation. According to the CFTC's 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 started to accumulate ETH in order to gain token usage rights through equity instruments. The two largest "crypto asset management companies" holding ETH together possess over 1 million ETH, with a total value of 3.9 billion USD.

Another publicly traded company announced in late July that it plans to raise $2 billion through the issuance of common and preferred stock for additional purchases of Ether. In addition to the net inflows from the ETH ETP product, the buying pressure from Ethereum enterprise asset management companies may also have driven the price increase.

In addition, Ethereum's share in the cryptocurrency derivatives market has increased this month, indicating a rising speculative interest in the asset. In the traditional futures listed on the Chicago Mercantile Exchange (CME), the open interest of ETH futures has risen to about 40% of Bitcoin (BTC) futures open interest. In perpetual futures contracts, the number of open contracts for ETH has increased to about 65% of the open contracts for Bitcoin (BTC). This month, the trading volume of Ether perpetual futures has also surpassed that of Bitcoin perpetual futures.

Although ETH received a lot of attention for most of July, Bitcoin investment products also continued to see stable demand from investors. The net inflows for the spot Bitcoin ETP listed in the U.S. reached $6 billion, and it currently holds an estimated 1.3 million Bitcoins. Several publicly listed companies have also expanded their Bitcoin asset management strategies.

Crypto Asset Boom

In July, the valuations of various sectors in the crypto market have 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 weakness of a few tokens. During July, the open interest and financing rates of many crypto assets have risen, indicating an increased risk appetite among investors and a rise in speculative long positions.

After experiencing strong returns, valuations may undergo some degree of adjustment or consolidation. The passage of the "GENIUS Act" is a significant positive 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 the House's "CLARITY Act" having received bipartisan support and passed 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 crypto asset valuations.

Conclusion

Nevertheless, the outlook for crypto assets in the coming months remains very optimistic. 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. With the support of regulatory bodies, 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 to favor crypto assets. These assets provide investors with opportunities to engage with blockchain innovations while having a certain immunity to some risks associated with traditional assets. In addition to the crypto-related legislation passed in July, Trump also signed the "One Big Beautiful Bill Act," locking in large federal budget deficits for the next decade.

He also clearly stated his hope to lower interest rates, emphasizing that a weaker dollar would benefit American manufacturing, and raised tariffs on various products and trading partners. A large budget deficit and lower real interest rates may continue to depress the value of the dollar, especially when receiving implicit support from the White House. Scarce digital commodities like Bitcoin and Ether may benefit from this and serve as partial hedging tools in portfolios facing the ongoing risk of a weak dollar.