What’s behind ETH’s big rally?
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
Crypto’s market cap hit a new all-time high. Also, bitcoin is near record levels, and a new executive order could expand crypto offerings in 401(k) accounts.
Ethereum notched $4,700 for the first time since 2021. A closer look at the main themes behind ETH’s rally toward its all-time high.
Strategy hit a milestone in its BTC-acquisition plan. Plus, more key stats to know from around the cryptoverse
MARKET BYTES
Crypto markets hit a new all-time high above $4.1 trillion
After surging over the weekend, crypto began the week in an unprecedented place: a new all-time high market capitalization of more than $4.1 trillion, hundreds of billions of dollars more than the market cap of tech titan Apple.
On Monday, BTC climbed above $122,000, just shy of its all time high; ETH continued to rally, breaking past $4,700 on Wednesday — its highest level since 2021, and near its all-time high above 4,800. (More on Ethereum’s big summer, which has been driven by factors including the rise of “Ethereum treasury companies,” in our main story.)
Here’s what you need to know…
Crypto markets rose after latest inflation report
After dipping slightly on Tuesday morning, crypto prices jumped following the release of the latest U.S. Consumer Price Index (CPI) report — a key barometer of inflation — which came in cooler than expected.
Why did markets start climbing following the report’s publication? Mainly, some analysts said, because the data increased speculation that the Federal Reserve would cut interest rates as soon as next month. (Falling interest rates tend to add liquidity into markets like stocks and crypto.)
Cut rate(s)…“The CPI data give ammunition to those betting the Fed has cover to resume cutting [interest rates] as soon as next month, while easing some concerns that new tariffs might stoke lasting price pressures,” the AP reported.
Trump executive order on 401(k) accounts could drive billions into crypto
One potential trigger of this weekend’s rally was an executive order President Trump signed on Thursday that expands access to alternative investment classes — including crypto, private equity, and real estate — in tax-advantaged 401(k) retirement-savings accounts.
The order requires the Department of Labor to create new guidance on such investments within the next six months. “The near-term impact of Trump's 401(k) executive order is that it sends another message to investors that crypto's regulatory awakening is here to stay,” Bitwise Head of Research Ryan Rasmussen told Decrypt. “That's clearly push[ed] the market higher.”
Mega billions… According to Rasmussen, if American workers allocate just 1% of their 401(k) savings to crypto, “that’s $125 billion of new capital entering the space, with a steady flow thereafter.”
Why crypto is “starting to replace cash” in Bolivia
In the South American nation of Bolivia, where inflation has surged to a 34-year-high of 25%, crypto has begun to replace cash for many, according to a new Bloomberg report. And this growth has almost entirely happened in the last year, after the government rescinded a crypto ban.
From small businesses to big corporations, signs of adoption are increasingly visible inside the nation of 11 million. “At the El Alto International Airport, a vendor lists prices of candy and sunglasses in USDT, a stablecoin issued by Tether and fixed at 1-for-1 to the dollar,” Bloomberg reports. “A top university pays its international faculty in bitcoin. For a while, even the state-owned oil company was authorized to use stablecoins for foreign payments.”
All of which makes Bolivia a key test case for crypto’s increasingly seamless payments infrastructure. According to Bloomberg, in just the last six months, digital payments in Bolivia grew more than fivefold to nearly $300 million.
Organic chemistry... The growth in Bolivia has been almost entirely organic. “Making it legal is all it took for many citizens to embrace it,” notes Bloomberg. As one Bolivian payments executive put it, “Necessity forces adoption.”
ETHER FEVER
Why Ethereum is having a blockbuster summer
If you were reading Bytes just a few months ago, you’d have seen a lot of stories about Ethereum struggling while bitcoin was racing to one new all-time high after another.
In recent weeks, however, ETH HODLers have been able to breathe a sigh of relief — as the newly decade-old cryptocurrency has started to outperform most other major asset classes.
On Wednesday, ETH cracked the $4,700 mark for the first time since late 2021, just shy of its previous all-time high price above $4,800. That’s a more-than-50% gain in the last month, compared to a broader crypto market that is essentially flat over the same period.
With public companies buying up billions of dollars in ether, analysts suggesting that a new “altseason” could be arriving, and onchain metrics booming, does this ETH rally have room to run?
Here’s what you need to know…
ETH just hit its highest price since 2021
The second largest crypto by market cap crossed $4,700 on Wednesday for the first time since November 2021 and is up more than 30% since President Trump signed the GENIUS Act into law, creating a legal framework in the U.S. for stablecoins — the majority of which run on Ethereum.
On Monday, Ethereum spot ETFs saw a record $1 billion in inflows, a sign of what Bitwise Chief Investment Officer Matt Hougan previously described as “demand shock,” in part due to the growing appeal of the ETFs.
With ETH now outpacing bitcoin in both year-to-date gains and in daily spot ETF inflows, a new Bernstein report suggests that the current momentum could be a sign of bigger things to come for altcoins too.
“In crypto lingo, this market structure is called the ‘alt rally’ i.e. when digital assets other than bitcoin rally stronger relative to bitcoin,” wrote Bernstein’s Gautam Chhugani. “We believe the alt rally has commenced.”
Ethereum treasury companies keep buying more ETH
One of the biggest factors driving the current rally didn’t even exist during Ethereum’s last bull run: Public companies, inspired by Michael Saylor’s BTC-accumulating firm Strategy, have been buying billions of dollars worth of ETH in the last few months.
Since the buying frenzy started in late May, public companies now own about 2.5% of ETH’s total supply. Leading the pack are BitMine Immersion Tech, which owns nearly $5 billion worth of ETH, and SharpLink Gaming, which has gobbled up more than $2.5 billion of ETH.
On Monday, BitMine purchased more than $1.3 billion worth of additional ETH, as part of its goal to eventually own around 5% of Ethereum’s total supply (worth $28.5 billion as of Wednesday). SharpLink announced it has raised another $400 million for purchases of its own.
Vitalik Buterin, the co-founder of Ethereum, endorsed the treasury strategy in a recent podcast interview. “ETH just being an asset that companies can have as part of their treasury is good and valuable,” he said. “Giving people more options is good.”
Activity on the Ethereum blockchain is nearing all-time highs, too
During previous ETH rallies, fees have often spiked as a result of network congestion. But a series of upgrades — particularly May’s Pectra update — have improved that issue.
On Sunday, the seven-day moving average of daily transactions hit a record-breaking 1.74 million. But as ETH has surged in recent weeks, the network has both increased its capacity and reduced transaction costs, said analysts from Fidelity.
During the 2021 bull market, Ethereum transactions could sometimes cost $40 or more. Currently, the cost to make a stablecoin transfer, for example, is consistently below a dollar, helping to make DeFi and peer-to-peer payments more affordable for ETH’s more than 17 million monthly active addresses.
In another sign of rising Ethereum network activity, ETH’s total value locked (the amount of money that people have deposited on the blockchain) just hit an all-time high of more than $312 billion.
The bottom line…
Ethereum investors have been waiting years for prices to rebound. Now the question is, can other altcoins follow suit? In the past month, bitcoin’s share of the overall crypto market cap is down more than 7%, a sign that altcoins are picking up momentum.
And if you’re wondering where market watchers think ETH could head in coming months, several forecasters, including Standard Chartered, have recently raised their ETH price targets.
NUMBERS TO KNOW
$60 billion
Current all-time high deposits in Aave’s decentralized lending protocol, boosted by ETH’s recent rally and surging interest in “liquid staking” tokens on Base. Aave leads as crypto’s largest DeFi application by total value locked, and rivals the deposit size of a top-fifty bank in the U.S.
208%
Increase in trade volume for XRP, after the SEC and crypto solutions firm Ripple resolved their long-running legal dispute. The XRP Ledger (XRPL) blockchain and its native XRP token work together as a peer-to-peer global payments system. Ripple is a blockchain company that uses XRP and XRPL as part of its digital payments network.
5
Number of years, as of Monday, that Michael Saylor’s firm Strategy has been acquiring bitcoin for its corporate treasury. The company (previously known as MicroStrategy) commemorated the anniversary by purchasing 155 bitcoin for $18 million, bringing its total holdings to 628,946 BTC, worth about $76 billion.
TOKEN TRIVIA
When is the next Bitcoin halving?
A
2025
B
2026
C
2027
D
2028
Find the answer below.
Trivia Answer
D
2028
