Crypto Rally Fueled by Macro Stability and Altcoin Rotation
31st July 2025 • 13 mins read
Key Numbers:
Bitcoin $ 118,271 (10%) Ethereum $ 3,787.33 (53.05%)
1-month return
Total Crypto Market Cap $ 3.94T (14.53%)
2025 returns
Bitcoin 24.10% Ethereum 11.12% Gold +26.55%
NASDAQ 9.38% S&P500 7.78%
Key Takeaways
- Bitcoin tested US $122,000 mid-July and closed near US $118,500 after profit-taking, with average daily volume rising 18% to US $125 billion and 30-day realized volatility around 65%.
- Ethereum outpaced Bitcoin with a 53% gain—peaking near US $3,940 on July 21 and closing at US $3,780—while spot-ETH ETFs saw US $5.4 billion in net inflows.
- On July 30 the Fed held rates at 4.25-4.50%, with data-dependent guidance reducing real-yield swings and underpinning risk-asset valuations.
- Equity markets hit records on July 28: the S&P 500 set its sixth straight close-high and the Nasdaq notched new intraday and closing peaks, fueling crypto inflows.
- U.S.-EU auto and industrial tariffs were capped at 15% and the U.S.-China tariff truce was extended to mid-November on July 28, easing macro risks.
- The U.S. dollar index stabilized in late July, low FX volatility reignited carry trades into crypto via liquid-staking and stablecoin cash-management products.
- SEC Chair Paul Atkins unveiled “Project Crypto” on July 31, proposing rule-based token classification and a tiered disclosure framework; drafts due Q4 2025 and final rules by mid-2026.
- During July 14–18 “Crypto Week,” the House advanced the GENIUS, CLARITY and Anti-CBDC Surveillance State Acts; all await Senate markups in Q3.
- Institutional products gained traction: BlackRock’s BUIDL fund reached US $2.4 billion; a Blue Chip Crypto ETF S-1 was filed; CME launched micro-options; and CoinShares saw US $1.04 billion in weekly inflows.
- DeFi TVL climbed to US $140 billion (60% on Ethereum); NFTs surged 101.8%; core DeFi and smart-contract platforms rose ~40%, while privacy tokens and bridges lagged.
July 2025 saw Bitcoin surge above $ 112,000 and even test $ 125,000 mid-month before profit-taking pressures drove it into a sideways trading range. Meanwhile, Ethereum outpaced Bitcoin significantly, signalling an imminent rotation into altcoins as traders hunt for fresh upside. This interplay of market moves, policy advances and new on-chain product adoption set the stage for August.
Macro and Trade-Policy Backdrop
The U.S. Federal Reserve’s July 30 decision to hold the federal funds rate at 4.25-4.50% provided markets with much-needed predictability. Chair Powell’s data-dependent guidance, despite dissents from two governors favoring cuts, narrowed volatility in real yields and underpinned risk-asset valuations.
Equity markets responded in kind. The S&P 500 posted its sixth straight record-high close on July 28, while the Nasdaq also notched new intraday and closing highs as the market cheered reduced policy uncertainty. Crypto assets tracked this risk-on sentiment, with large institutional flows and retail demand driving volume and volatility higher.
Source: https://www.theblock.co/data/crypto-markets/bitcoin-etf/spot-bitcoin-etf-flows
Simultaneously, policy-induced uncertainty receded on two fronts. On July 28, U.S. and EU leaders agreed to cap tariffs at 15% on autos and select industrial goods, averting supply-chain disruption. In parallel, negotiators in Stockholm extended the U.S.-China tariff truce through mid-November, providing multinational manufacturers and commodity markets with greater visibility. Together, these policy developments reduced the likelihood of abrupt macro shocks, creating a stable backdrop for digital-asset appreciation.
Source: https://www.tradingview.com/
The US dollar index stabilized after a mid-month dip as Chair Powell’s data-dependent guidance and eased tariff risks calmed markets, and that subdued FX volatility alongside steady Treasury yields reignited traditional carry trades while extending into crypto via liquid-staking protocols and regulated stablecoin cash-management products. Such low-volatility conditions are ideal for carry-style strategies, although they can quickly invert if volatility resurges. At the same time, a softer greenback has acted as a tailwind for risk assets, Bitcoin and other digital currencies included, as investors rotate out of dollar funding into higher-yield instruments.
Regulatory and Legislative Milestones
SEC Chair Paul Atkins introduced “Project Crypto,” signalling shift toward rule-based oversight of digital assets. The initiative proposes amendments to interpretive guidance on Section 3(a)(10) of the Securities Act, embedding objective tests such as the presence of a distributed network independent of any promoter and the reasonable expectation of profits to distinguish payment tokens, utility tokens and investment contracts. By codifying these criteria, the SEC aims to replace subjective Howey analyses with transparent, standardized rules that eliminate longstanding legal uncertainty for developers and institutional participants.
A central pillar of Project Crypto is its tiered disclosure framework, which scales reporting requirements to a token’s market capitalization and trading volume. Under this model, small-cap projects would face streamlined periodic filings, while large issuers would adhere to more robust transparency standards, thereby reducing compliance friction for early-stage innovators without compromising investor protection. The proposal also includes safe-harbor provisions for tokenized securities offerings, tailored exemptions for initial coin offerings, airdrops and DeFi activities, and amendments to broker-dealer rules to accommodate “super-apps” that integrate staking, lending and trading services under a single license. Draft rulemakings are slated for Q4 2025, followed by public-comment periods, with final rules expected by mid-2026.
Concurrently, the U.S. House designated July 14-18 as “Crypto Week,” advancing three bipartisan bills through committee procedures:
- GENIUS Act establishing a federal charter for stablecoin issuers with one-to-one reserve backing in U.S. dollars or Treasury bills, monthly reserve attestations and capital-liquidity buffers to prevent runs
- CLARITY Act amending the Securities Act’s definitions to differentiate payment tokens, utility tokens and securities, thereby delineating SEC and CFTC jurisdictions
- Anti-CBDC Surveillance State Act prohibiting any programmable features in a U.S. central bank digital currency that could enable transaction censorship or unwarranted profiling without judicial oversight.
Following House approval, the GENIUS, CLARITY and Anti-CBDC Surveillance State Acts now await Senate markups in Q3, reflecting rare bipartisan alignment on the need for transparent, rules-based oversight to secure U.S. leadership in digital-asset markets. Senate committee chairs have signalled plans to refine stablecoin reserve requirements, clarify token-classification criteria and reconcile federal-state jurisdictional overlaps, steps designed to resolve key uncertainties before potential floor votes later this year.
Meanwhile, international central banks are advancing their own digital-currency experiments at a measured pace. Pakistan’s central bank unveiled a pilot for a digital rupee aimed at boosting financial inclusion and lowering remittance costs. In Japan, the Bank of Japan has expanded proof-of-concept trials for a digital yen, testing privacy safeguards and integration with the existing banking system, yet has not committed to a launch date, underscoring a cautious, data-driven approach to CBDC dedeployment.
Institutional Product Evolution
Institutional adoption accelerated through vehicles that bridged traditional finance and crypto. BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) expanded its assets under management to approximately $ 2.4 billion by late July, nearly tripling year-over-year. The fund’s appeal lies in daily liquidity, audited reserves and third-party custody arrangements that satisfy pension-plan and endowment mandates.
Source: https://www.coingecko.com/en/coins/blackrock-usd-institutional-digital-liquidity-fund
Digital World Acquisition Corp filed an S-1 for a “Blue Chip Crypto ETF” allocating to Bitcoin, Ether, Solana, XRP and CRO. CME Group then launched micro-Bitcoin and micro-Ether options in mid-July, offering more granular hedging tools for smaller institutions and sophisticated retail traders. Meanwhile, JPMorgan’s Digital Vault pilot expanded to include staking services for proof-of-stake networks, reflecting growing demand for regulated, on-chain yield products.
CoinShares data reinforced this momentum: digital-asset investment products saw $ 1.04 billion in weekly inflows during the week of July 7, marking the twelfth consecutive week of net positive flows and pushing total assets under management to a record $ 188 billion. On a proportional basis, Ethereum products accounted for 1.6% of weekly inflows—double Bitcoin’s 0.8% share—highlighting institutional preference for DeFi-related yield narratives .
Bitcoin’s Resurgence
Bitcoin began July trading near $ 105,600 and surged past $ 122,000 on July 14, matching its October 2024 all-time high . The rally was driven by spot-ETF inflows exceeding $ 1 billion in a single session and supportive macro signals. After mid-month profit taking, BTC consolidated in a $ 115,000-119 000 range and closed around $ 118,500. Average daily trading volume climbed to $ 125 billion, an 18% increase month-over-month, while 30-day realized volatility hovered near 65%, reflecting intense institutional and retail participation.
Source: https://www.tradingview.com/chart/?symbol=BITSTAMP%3ABTCUSD
Bitcoin’s miner revenue metrics remained elevated throughout July, with daily income averaging around $ 56 million and peaking at nearly $ 63 million on July 15, up roughly 65% year-over-year from July 2024. Transaction fees accounted for approximately 8 to 10% of total miner revenue, underscoring robust on-chain usage in addition to block subsidies. Network security also strengthened; the Bitcoin hashrate climbed to 942.96 EH/s on July 27, just below its all-time high and reflecting a 42% year-over-year increase, while difficulty adjustments maintained block times near the 10-minute target, a testament to miners’ sustained capital commitments and confidence .
Source: https://www.bitcoinmagazinepro.com/charts/bitcoin-hashrate-chart/
On-chain supply metrics reinforced the long-term uptrend. Realized capitalization rose from about $ 812 billion at the start of 2025 to roughly $ 955 billion by month-end, pushing Bitcoin’s realized price above its 200-week moving average, now near $ 49,200, which has historically served as strong support during bear markets. At the same time, exchange reserves fell to 14.5% of total supply, the lowest level since 2018, signalling reduced selling pressure and increased hodling. Realized net-profit metrics indicated that mid-term holders were taking in under $ 900 million daily, suggesting the market is absorbing large migrations of coins and gearing up for renewed upside. Technically, Bitcoin faces key resistance near $ 122,800, its July 14 peak, and critical support around $ 112,000 to $ 113,000, the bounds of its recent consolidation range.
BTC dominance chart shows a peak near 66% in late June, followed by a rapid drop to just under 61% by month-end. Since BTC dominance measures Bitcoin’s share of the total crypto market cap, a 5-point slide equates to roughly $200 billion shifting into other tokens. This massive decline underscores true capital rotation, profit takers locked in gains on Bitcoin’s rally and redeployed proceeds into higher-beta altcoins, with Ethereum, DeFi tokens and layer-1 challengers all catching that flow. In practical terms, falling BTC dominance means altcoins’ market caps are rising faster than Bitcoin’s, a classic signal that broad market appetite has moved beyond the original store-of-value narrative into yield-oriented and utility-driven sectors.
Ethereum’s Outperformance
Ethereum posted its strongest monthly gain since mid-2022, rallying from roughly $ 2,500 at July 1 to an intraday high near $ 3,940 on July 21 before closing around $ 3,780, a 52% return . Institutional demand was evident in spot-ETH ETF flows, which netted over $ 5.4 billion as allocators positioned for the regulatory clarity promised by Project Crypto . With Bitcoin consolidating between $ 115,000 and $ 119,000 after testing resistance at $ 122,800, traders rotated profit-taking proceeds into Ethereum whose late-cycle rally offered greater upside potential and compound-yield optionality via staking and DeFi strategies.
The weekly ETH/BTC chart reveals a downtrend from July 2022 through May 2025, when the ratio bottomed near 0.017 BTC per ETH. July 2025 marked a decisive reversal, with the ratio jumping above 0.032—its highest level since mid-2022—underscoring growing conviction that Ethereum will outperform Bitcoin in the next phase of the cycle. This rebound signals that capital is shifting from Bitcoin’s range-bound moves into Ethereum, driven by expectations of continued protocol upgrades, Layer-2 scaling momentum and enhanced on-chain yield opportunities.
Decentralized Finance Revival
DeFi saw a broad resurgence. Total value locked across decentralized protocols reached $ 140 billion, its highest level since May 2022, with Ethereum capturing nearly 60% of aggregate TVL . Lido led with $ 32 billion in liquid-staking deposits, Aave held $ 34 billion in lending markets and restaking platforms recorded record inflows.
Source: https://defillama.com/
Solana’s TVL rose 23%, Avalanche’s 33% and Sui’s 39%—as novel AMM designs, NFT-collateral experiments and decentralized gaming drew capital. Ethereum network usage peaked at 1.82 million daily transactions on July 24 and active addresses averaged 450,000. The network-wide average gas price fell to 0.897 gwei by July 31, reflecting improved Layer-2 adoption and optimism around proto-Danksharding .Bitcoin remains a liquid-store-of-value anchor while Ethereum and allied chains emerge as multi-vector yield hubs. In response
Sector Performance
July’s rally was dominated by high-beta, narrative-driven sectors. NFT applications led with a 101.8% gain as anticipated retail inflows and Ethereum’s late-cycle momentum lifted prices off years-long lows (see chart above). Ethereum-native tokens followed with a 58.3% advance, underpinned by robust spot-ETF inflows and renewed DeFi interest. First-generation smart-contract platforms, such as Solana and Avalanche, rose 43.1%; core DeFi protocols averaged 40.4% gains as total value locked reached a three-year high.
Mid-cap themes also delivered strong returns: oracles climbed 36.2%; data-availability solutions gained 31.4%; and decentralized physical infrastructure networks increased 29.8%, each buoyed by scaling narratives. Memecoins rallied 29.7% amid speculative rotations; staking-service tokens added 27.6% on compound-yield optimism. Tokenized real-world-asset protocols, utilities and services and broader smart-contract ecosystems each rose between 23% and 24%, reflecting growing allocator demand for regulated on-chain assets. In contrast, defensive or infrastructure-adjacent sectors such as privacy protocols (0.2%) and cross-chain bridges (5.5%) lagged, underscoring that July’s upside was concentrated in growth and innovation themes rather than foundational infrastructure.
Closing Insights
July saw Bitcoin test $ 122,000 before settling into a $ 115,000 to $ 119,000 consolidation range, and its market dominance slipped to under 61% (down from roughly 66% at June’s close), indicating profit taking drove capital into higher-beta assets . Ethereum outpaced Bitcoin with a 52% return, absorbing over $ 5.4 billion in spot-ETF inflows while Bitcoin ETFs recorded about $ 6.6 billion in net inflows over a 12-day span . The weekly ETH/BTC ratio climbed above 0.032, its strongest level since mid-2022, underscoring a rotation into altcoins as Bitcoin nears its cycle peak.
Concurrently, the broader Ethereum ecosystem resumed its upward trajectory. Total value locked across all DeFi protocols reached $ 153 billion (the highest since May 2022), while daily Ethereum transactions peaked at 1.82 million and active addresses averaged 450 000 . Layer-2 usage accelerated with rollup volumes rising 45% month-over-month, and NFT trading volumes rebounded by 18%, reflecting renewed retail engagement. Developer activity intensified around EIP-4844 and data-availability sampling research, and ETHGlobal hackathons drew hundreds of teams to prototype scaling and application-layer innovations. As August unfolds, these on-chain growth vectors (DeFi TVL, Layer-2 expansion, NFT market revival and developer engagement) may continue supporting digital-asset momentum beyond mere price movements.
