What a month July has been for the markets! Especially for ETH! Let’s explore.

In this month alone, ETH has experienced a meteoric rise of up to almost 60%, strongly outperforming BTC! BTC, having experienced a similar rise earlier on, in contrast, has risen approximately by 10% this past month.

It comes with no surprise that views on what was the whipping boy of the crypto space last year, has flipped, with most crypto-native X accounts shedding a positive light on the asset. 

Bullish and Bearish Cases

With ETH facing some resistance at the 3,900 level, and many hoping for the asset to break past $4,000, let’s take a look at the explanations for ETH’s rise, current bullish (and bearish) cases for ETH, and the crypto markets in general:

Risk On:

• Weakened USD fuelling US equities, gold and BTC
• Improved trade-related deal between the US and EU, with ongoing tariff negotiations between the US and China, Canada, etc. 
• Regulatory clarity in the US via GENIUS and CLARITY Acts
• Potential rate cut in September
• Escalating Israel-Iran and Russia-Ukraine tensions could potentially have an increased positive impact on BTC and the broader crypto markets
• BTC dominance falling to 60%
• Increased interest in ETH and other assets
  • Looming staked spot ETF approvals
  • By corporate treasuries (eg. SBET)
  • Due to GENIUS act
  • ETH perps OI surged from under 18b to over 28b two weeks ago

Risk Off:

• June CPI highlighting tariff-related inflation - may affect the amount of rate cuts in 2026
• Tariffs also may not be fully priced in
• Powell stepping down - positive in the short term, but may be bearish in terms of inflation management in the longer term

What’s Next?

Given the recent huge surge in the markets, and a potential decision of the Fed choosing to keep rates flat in July, we may be due for a slight retracement and choppy price action in the short term. In such market conditions, Ampersan’s Liquidity Provider strategy on Grvt Strategies provide stable returns. On the flipside, there may be potential for positive price action in the short term - a potential short squeeze may occur, given the current open interest in ETH shorts, especially if ETH hits $4,000. 

Source: Coinglass

However, given the consensus view of a looming rate cut in September, and a general rate cutting environment in 2026, we could be possibly looking at positive price action in the medium to longer term. In a positive environment like this, Grvt Strategies such as MizerXBT’s trend following Strategy, or AllDeFi’s Quant Directional Strategy could be strategies that stand to capture market upside.   

To add, with ETH’s recent outperformance of BTC, many are calling for a potential altcoin season, with a focus on tokens with fundamentals, rather than the narrative of “rising tides lifting all boats”, that we have experienced in previous cycles. 

$PUMP pumps, then does the opposite of pump

The launch of crypto’s most successful token launchpad’s token, $PUMP by pump.fun, saw massive interest - its public sale with a raise of $600m at a $4b valuation was sold out in 10 minutes. Many who assumed that they had secured an allocation on certain centralized venues, hedged their position by shorting the perp, but were caught off guard when (i) they did not receive their allocation, and (ii) the $PUMP token surged in price, thereby facing losses. 

From its public sale FDV of $4b, the token rose by a whopping 70% within a day. However, since then, it has tumbled from its highs by approximately 60%. Despite pump.fun’s healthy revenues of 662.7m this past year, such price action of a cycle-defining platform begs the question on whether the fundamentals-based approach that many are calling for, in a supposed looming altcoin-cycle, even matters at all. Investors should also be taking into account the founding team’s management of their native token holdings, and VC investor allocations.

ETFs + Corporates and Corporate Treasuries’ accumulation of tokens

It is clear that this cycle is and has been different through high institutional involvement via (i) Spot ETFs (and potential spot ETH staking ETFs), (ii) corporate organizations accumulating crypto (mainly BTC), and (iii) the accumulation of tokens by corporate treasuries, attempting to replicate Saylor’s Microstrategy, with other crypto assets (aside from BTC or ETH):

• Canary Capital filing staked Injective ETF proposal, alongside its other filings for LTC, SOL, XRP, HBAR and SUI.
• DeFi Development Corp brings it’s treasury to 999,999 SOL and equivalents
• Upexi purchased an additional 100,000 SOL for $17.7m on 17 July, bringing it’s total holdings to 1,818,809 SOL. (approx. $367m)
• GameSquare Holdings, Inc. (Nasdaq: GAME) acquires CryptoPunk to anchor 6-10% annualized stablecoin returns, and increases ETH treasury holdings to over $52m

As much as Galaxy’s Steve Kurz believes that companies holding crypto is only “Phase One”, and that such ETFs and token accumulation by corporates has had a massively positive impact on the prices of crypto assets, we would also have to be wary of potential systemic risks of such gigantic holdings of assets across the board by many institutions - after all, the average purchase price of ETH or SOL by such corporates, appear to be at a later stage (and therefore a higher entry), as compared to the average purchase price of BTC by Saylor’s Microstrategy.

ETH Unstaking

With ETH’s recent positive performance, many have been monitoring exit queues of ETH being unstaked, with fears of the ETH party being stopped. Co-Founder of Bitcoin’s Taproot Wizards, Udi Wertheimer, highlighted that there is about 350,000 ETH (approx. $1.3b) being unstaked, tying it with a historical case in January 2024, where ETH “went down only from there”. He did, however, specify that there could be other reasons apart from selling, as to why such ETH is being unstaked.

As others have chimed in, in response, citing that the entry queues for ETH being staked, far outweighs the amount of ETH being unstaked in the exit queue:

Another important thing to note was a recent stETH depeg, triggered by an interest rate shock on Aave, as ETH’s validator exit queue surged past 475,000 validators this past week, increasing the unstaking wait time to 9 days. According to Galaxy Digital Research, this could be attributed to one single trader’s removal of ETH supplied on Aave, causing Aave’s ETH borrow rates to soar from 3% to over 18%, creating a negative carry for DeFi users engaging in recursive borrowing. Despite this not having a negative impact on the price of ETH and ETH spot ETF flows, this is something important to keep in mind from a systemic POV, especially if and when staked spot ETFs come into play - the lines of what affects ETH prices in the DeFi and CeFi worlds, and how the asset is handled, have blurred, given the increased large holdings of ETH across large corporations.