There’s real progress being made with its leadership and its technology, too.
Ethereum (ETH -0.09%) blasted 49% higher during the past 30 days, vaulting to about $3,896 as of Aug. 8. That breakout has investors wondering whether the world’s leading smart contract network finally shook off its seemingly interminable doldrums, or if it’s merely reverting to its mean after being heavily oversold.
Given the slate of fresh catalysts lining up for the rest of 2025, betting against the new trend could prove expensive. Let’s dig into the forces propelling this coin higher, examine the engines that could keep it climbing, and take note of the risks that still lurk.
Image source: Getty Images.
This rally probably (still) has legs
Recently, Ethereum exchange-traded funds (ETFs) have turned into black holes for institutional capital, hauling in $8.7 billion in the first full year since their launch. Persistent inflows create predictable buying pressure, and it shows on the chart. But what’s inspiring institutional investors to pile in right now?
In short, the chain’s tech roadmap is finally clear again.
The long-anticipated Pectra hard fork launched on May 7, instituting a bundle of improvements like raising validator caps (thereby increasing staking yields), cutting gas (user) fee volatility, and prepping the chain for future efficiency upgrades that are now on the way. Pair that with the Ethereum Foundation’s new security initiative, an effort to harden the network so it can safely secure even more capital than it does now, and it is clear the stewards of the protocol are thinking a lot more about its economic value than they did in past years. The benefits of this perspective shift are already palpable.
Finally, the Ethereum community has been vocal about wanting exactly that shift.
In January, a high-profile proposal to create a second Ethereum foundation surfaced after holders argued the existing structure was too academic in nature and not market-minded enough. If this proposal had advanced, it would have effectively created a governance crisis by signaling an acute lack of confidence in the original Ethereum Foundation’s leadership. Governance drama normally spooks buyers, but this episode had the opposite effect by jolting leadership into action, which is bullish.
The case for it being worth even more in the future
Institutional inflows, a seamless tech upgrade, and a potential governance crisis averted gracefully are all well and good. But generating durable upside means stoking structural demand over the long term. And right now, Ethereum has three such engines to create that demand that are revving at the same time.
Its much-vaunted Layer-2 (L2) scaling solutions are now handling roughly 10 times as many operations per second as Ethereum’s mainnet, yet they still settle their transactions back to it, thereby expanding the network’s throughput without eroding its security moat as some had feared. This suggests that the somewhat controversial scaling strategy of the chain’s leadership, which is to say promoting the use of those L2 chains to take some of the traffic load off of the mainnet, is now unambiguously working as intended. The beneficial implications of this gambit paying off are only starting to be widely understood, but for now just think of it as equivalent to a highway system becoming less congested as a result of successfully shunting traffic onto newly built local roads.
Meanwhile, an interesting opportunity is brewing at the intersection of Ethereum and artificial intelligence (AI).
Traders flocked to AI-linked tokens in mid-July on the premise that decentralized computation providers and data marketplaces will eventually need a battle-tested settlement layer, and Ethereum is still the default option for that role.
The same goes for its smart contract infrastructure, which remains the standard in the cryptocurrency sector; when it comes time for AI agents to interact with smart contracts on their own, they will probably be doing so on Ethereum or another chain that uses the same programming language, called Solidity.
Taken together, accelerating L2 activity and a nascent AI narrative provide two distinct demand pipelines that could keep Ethereum’s engine humming long after the most intense period of the current rally fades.
Nonetheless, competition is an issue worth understanding.
Chains such as Solana are angling for the same prizes, often while boasting faster execution and lower fees. Furthermore, investors need to keep an eye on whether ETF inflows to Ethereum persist if risk appetite cools, and whether the Ethereum Foundation can balance its former research ambitions with pragmatism about the financial aspects of the network.
Overall, Ethereum is certainly worth buying now that there is clear evidence the market is finding its latest technology upgrade and scaling improvements to be genuinely valuable. It’s still fairly risky and it will continue to be volatile, so it isn’t exactly worth betting the farm on, but if you’re looking to allocate some of your portfolio to crypto, it’s worth investing in.
