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Author: Grayscale research team; Translation: Bitchain Vision xiaozou
Key points of this article:
• In July 2025, the price of Ethereum network ETH tokens rose by nearly 50%.Investors focus on stablecoins, asset tokenization and institutional adoption rates – these areas are the key advantages that distinguish this veteran smart contract platform from its peers.
• The passage of the GENIUS Act has become a watershed for stablecoins and crypto asset classes.Market structure legislation will still take a long time to pass in the U.S. Congress, but regulators can continue to support the digital asset industry through other policy adjustments—such as approving pledge functionality in crypto-investment products.
• The valuation of crypto assets may consolidate in the short term, but we believe that the asset class will remain bright in the coming months.Crypto assets not only provide exposure to blockchain innovation, but also may avoid specific risks of traditional assets (including the risk of the continued weakening of the US dollar).For these reasons, Bitcoin, ETH and many other digital assets are expected to continue to gain investors’ favor.
On July 18, 2025, President Trump signed the GENIUS Act, which is a new legislation that provides a comprehensive regulatory framework for U.S. stablecoins.To some extent, the enactment of the bill can be seen as the “end of the initial stage” of the crypto asset class: public chain technology is shifting from the experimental stage to the core of the regulated financial system.The debate over whether blockchain can benefit mainstream users has ended, and regulators have shifted their focus to ensuring industry development while establishing appropriate consumer protection and financial stability guarantee mechanisms.
The crypto market welcomed the passage of the GENIUS Act, and the positive macro market environment in July also provided support.Stock indexes in most regions around the world are rising, with fixed-income market returns leading by high-risk sectors such as U.S. high-yield corporate bonds and emerging market bonds.Strategies that benefit from a decline in volatility also performed well.FTSE/Grayscale Crypto Industry Market Cap Weighted Index—a market cap Weighted Index for investable digital assets—up 15% and Bitcoin price rose 8%.The most impressive performance was Ethereum Network’s ETH, which rose 49% in July and rose more than 150% since its low in early April.
chart1: Crypto Assets7Overall performance was steady in the month.ETHBrighten
1, please call it another“Rebound“
As the smart contract platform with the largest market value, Ethereum is a key infrastructure of the financial system based on blockchain.Until recently, however, ETH price performance has lagged significantly behind Bitcoin – and other smart contract platforms such as Solana – which has raised market doubts about its development strategy and its competitive position in the industry (Figure 2).
chart2: Since MayETHPerformance surpasses Bitcoin
The market’s enthusiasm for Ethereum and ETH may well reflect the current focus on stablecoins, asset tokenization and institutional blockchain applications – which is exactly the core advantage that distinguishes Ethereum from other competitive platforms (Figure 3).For example, if included in its Layer 2 network, the Ethereum ecosystem carries over 50% of the stablecoin balance and processes approximately 45% of the stablecoin transactions denominated in USD.The platform also accounts for 65% of the total locked value of the Decentralized Finance (DeFi) protocol, and nearly 80% of the tokenized products of USD Treasury bonds.For institutions such as Coinbase, Kraken, Robinhood and Sony that are planning to encrypt, Ethereum has always been its preferred underlying network.
chart3: Ethereum is the leading blockchain for stablecoins and tokenized assets
The increase in adoption rates of stablecoins and tokenized assets will also benefit Ethereum and other smart contract platforms.Grayscale Research believes that stablecoins are expected to reshape parts of the global payments industry through lower costs, faster settlement speeds and higher transparency.This involves two types of income sources related to stablecoins: one is the net interest margin (NIM) obtained by stablecoin issuers (such as Tether, Circle), and the other is the transaction fee obtained by the chain that handles transactions.As Ethereum has already taken the lead in the stablecoin field, its ecosystem is likely to gain higher transaction fee benefits as stablecoin adoption rates increase.
The same is true in the tokenization field—a process designed to bring traditional assets into blockchain.The current tokenized asset market is still small (total of approximately US$12 billion), but it has shown growth potential.Currently, tokenized U.S. Treasury bonds are the largest asset class, and Ethereum dominates the market in this field.In terms of alternative assets, Apollo Global recently launched an on-chain credit fund with Securities.Tokenized equity, although small, has grown rapidly: Robinhood has launched tokenized stocks from private companies such as SpaceX and OpenAI, and eToro has also announced plans to tokenize stocks on Ethereum.Apollo’s products support multi-chain, while Robinhood and eToro’s tokenized equity products will be only available within the Ethereum ecosystem.
2,ETPFund inflows and their subsequent impacts
Investor interest in Ethereum drives significant net inflows of spot ETH exchange-traded products (ETPs).In July 2025, the net inflow of spot ETH ETPs listed in the United States reached US$5.4 billion – the largest net inflow scale in a single month since the product was launched last year (Figure 4).Currently, the total holdings of ETH ETPs are about US$21.5 billion (equivalent to nearly 6 million ETH), accounting for about 5% of the total circulation of ETH.According to the US Commodity Futures Trading Commission (CFTC) “Traders Position Report”, we estimate that only US$1-2 billion of net inflows reflect the “basis trading” of hedge funds, and the rest are pure long funds.
chart4:ETH ETPsNet inflow breakthrough50$100 million
Many listed companies have also begun to increase their holdings in ETH, providing investors with token exposure through equity tools.The two “crypto asset vault companies” that currently hold the most ETH are Bitmine Emersion Technologies (stock code: BMNR) and SharpLinkGaming (stock code: SBET).The two companies hold more than 1 million ETHs in total, with a total value of US$3.9 billion.BTCS (stock code: BTCS), a third listed company, announced in late July that it plans to raise $2 billion through the issuance of common and preferred shares to increase its holdings of ETH (BTCS currently holds about 70,000 ETH, now worth about $250 million).In addition to the net inflow of funds from ETH ETP products, buying demand from corporate vault companies may also drive ETH prices to rise.
On the other hand, Ethereum’s share in the crypto derivatives market has increased this month, indicating that the market’s speculative interest in the asset is increasing.Among traditional futures contracts listed on the Chicago Commodity Exchange (CME), ETH futures open contracts (OI) grew to around 40% of Bitcoin (BTC) futures OI (Figure 5).In terms of perpetual futures contracts, ETH’s OI grew to about 65% of BTC OI.The trading volume of ETH perpetual Futures this month also exceeded that of BTC perpetual Futures.
chart5:ETHGrowth of open futures contracts
Despite Ethereum’s high-profile appearance in July, Bitcoin investment products remained stable inflows.Spot Bitcoin ETPs listed in the United States had a net inflow of US$6 billion that month, and their current holdings were estimated to reach 1.3 million BTC.Several listed companies have also expanded their Bitcoin fund management strategies: Industry leader Strategy (formerly MicroStrategy) issued $2.5 billion in new preferred shares to increase their holdings in Bitcoin; Adam Back, an early pioneer of Bitcoin and CEO of Blockstream, announced the establishment of a new Bitcoin fund management company Bitcoin Standard Treasury Company (stock code: BSTR), which will use Bitcoin held by Back and other early adopters as the capital basis and also conduct equity financing.BSTR’s operating model is highly similar to the SPAC (Special Purpose Acquisition Company) transactions previously designed by Cantor Fitzgerald for Twenty One Capital, a Bitcoin fund management company backed by Tether and SoftBank.
3, altcoin craze
In July, the valuations of various sectors of the crypto market rose across the board.From the perspective of crypto industry classification, the smart contract sector performed best (benefiting from the 49% increase in ETH), and the artificial intelligence sector performed the weakest (draged by the special weakness of individual tokens) (Figure 6).The futures open contracts for most crypto assets rose simultaneously with the capital rate (financing costs of leveraged long positions) during the month, indicating that investors’ risk appetite has increased and speculative net long positions have increased.
chart6:7The crypto market rose across the board
After a strong return cycle, there is always a risk of pullback or consolidation of the valuation.Although the passage of the GENIUS Act provides a major positive catalyst for the crypto asset class (which explains the dual strong performance of absolute returns and risk-adjusted returns), the legislative driving force may weaken in the short term.Although the U.S. Congress is considering legislation on crypto market structure (the House version of the CLARITY Act was passed by bipartisan support on July 17), the Senate is still advancing its own version and it is unlikely to make substantial progress before September.
Nevertheless, we are optimistic about the prospects for the asset class in the coming months.First, regulatory dividends can be released continuously without legislation: the White House’s recent special report on digital assets has put forward 94 specific development suggestions (60 of which fall within the scope of the regulatory authority, and the remaining 34 require congressional or cross-departmental cooperation).Secondly, regulatory agencies can improve investment tools by approving pledge functions and expanding the spot encrypted ETPs product matrix, and continuously guide incremental funds to enter the market.
In addition, we expect the macro environment to continue to benefit crypto assets—which can not only provide blockchain innovation exposure but also avoid specific risks of traditional assets.In addition to signing crypto-related legislation in July, President Trump also signed the OBBBA Act, which institutionalizes the huge federal budget deficit over the next decade.Trump also made it clear that the Fed hopes that the Fed will cut interest rates, stressing that a weaker dollar will benefit U.S. manufacturers and impose tariffs on a variety of products and trading partners.Huge budget deficits and lower real interest rates may continue to suppress the value of the dollar, especially with the White House acquiesced.Scarce digital commodities such as Bitcoin and ETH may benefit from this environment and can serve as some tools in the portfolio to hedge the risks of the continued weakening of the US dollar.
