Ethereum price soars, stablecoins and asset tokenization become the focus

In July 2025, the price of ETH on the Ethereum network surged nearly 50%. Investors' attention is focused on stablecoins, asset tokenization, and institutional adoption, which are the core advantages of Ethereum as the oldest smart contract platform.

The recently passed bill is an important milestone for stablecoins and the entire category of crypto assets. While legislative measures related to market structure may still 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 fluctuations, but the industry remains optimistic about the outlook for the coming months. Crypto assets provide investors with the opportunity to engage with blockchain innovations, while potentially offering some resilience against certain risks associated with traditional assets. Therefore, Bitcoin, Ethereum, and many other digital assets are expected to continue to be favored by investors.

On July 18, the signing of a new bill provided a comprehensive regulatory framework for stablecoins in the United States. This marks a new phase for the category of crypto assets: 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 come to a close, 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 performed positively due to the passage of new legislation, while also being supported by favorable macro market conditions. Stock indices across most regions of the world rose, and 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.

A market-cap weighted investable digital asset index rose by 15%, while 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 total increase of over 150% since the low point in early April.

The advantages of Ethereum are once again highlighted

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 it has even lagged behind other smart contract platforms. 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—areas where Ethereum excels. For example, including its Layer 2 networks, the Ethereum ecosystem holds over 50% of the stablecoin balances and processes about 45% of stablecoin transactions (in terms of USD value).

Ethereum is still 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 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. There is a view that 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: first, the net interest margin (NIM) earned by stablecoin issuers, and second, the transaction fees earned by the blockchain processing the transactions. Since Ethereum has already 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, and Ethereum is the market leader. In the alternative asset space, some large financial institutions have recently launched on-chain credit funds.

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

ETH Trading Products in High Demand

Investor interest in Ethereum has resulted in significant net inflows into spot ETH exchange-traded products (ETPs). In July, net inflows 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, the ETH ETP holds approximately $21.5 billion in assets, equivalent to nearly 6 million Ether, accounting for about 5% of the total circulation. According to the trader position report data from regulatory agencies, it is estimated that only $1 billion to $2 billion of the net inflow of ETH ETP comes from the "basis trading" of hedge funds, with the remainder being long-term capital.

Some listed companies have also started accumulating ETH in order to gain token usage rights through equity instruments. The two largest "crypto asset management companies" holding ETH together hold over 1 million ETH, with a total value of 3.9 billion USD.

Another publicly listed company stated in late July that it plans to raise $2 billion by issuing common and preferred stock to further purchase Ether (the company currently holds about 70,000 Ether, valued at approximately $250 million). In addition to the net inflow of the ETH ETP product, buying pressure from Ethereum enterprise fund management companies may also have driven up the price.

In addition, Ethereum's share in the cryptocurrency derivatives market has increased this month, indicating a rising speculative interest in the asset. In traditional futures, the open interest for ETH futures (OI) has risen to about 40% of Bitcoin's (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.

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 the spot Bitcoin ETP listed in the U.S. reached $6 billion, with an estimated 1.3 million Bitcoins currently held. Several publicly listed companies have also expanded their Bitcoin fund management strategies. Market leaders have issued $2.5 billion in new preferred stock to purchase more Bitcoin.

In addition, a Bitcoin early pioneer and CEO of a blockchain company announced the establishment of a new Bitcoin fund management strategy company. The company will use the Bitcoins of the founder and other early adopters as capital and will raise equity. This is very similar to the SPAC (Special Purpose Acquisition Company) deal organized by a financial services company for another fund management company earlier.

The cryptocurrency market is experiencing a comprehensive rise.

In July, the valuations of various sectors in the cryptocurrency 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 increase in investors' risk appetite and a rise in speculative long positions.

After experiencing strong returns, valuations may undergo a certain degree of correction or consolidation. The recent passage of the bill is a significant positive for the cryptocurrency asset class, driving both absolute and risk-adjusted returns. Congress is also considering legislation on the structure of the cryptocurrency market, with the relevant bill in the House having bipartisan support and passed on July 17. However, the Senate is reviewing its own version of market structure legislation, and significant progress is not expected before September. Therefore, in the short term, there may be fewer legislative catalysts supporting the rise in cryptocurrency asset valuations.

Conclusion

Despite this, the industry remains very optimistic about the future prospects of crypto assets in the coming months. First, even without legislation, regulatory tailwinds still exist. For example, the government 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 (the remaining 34 require action from Congress or joint action from Congress and 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 to favor crypto assets. These assets provide investors with opportunities to engage with blockchain innovations and exhibit a certain immunity to some risks associated with traditional assets, such as the persistent weakness of the dollar. In addition to the crypto-related legislation passed in July, the government has also signed a bill to lock in a large federal budget deficit for the next decade.

The government has also made it clear that it hopes to lower interest rates, emphasizing that a weaker dollar will benefit American manufacturing, and has increased 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 supported implicitly by the government. 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 weakening dollar.