Institutionalization, Maturation, and Diversification Processes in the Crypto Asset Industry Driven by Bitcoin's Record High and the Entry of Institutional Investors

 

Introduction

The crypto asset market as a whole is booming, with Bitcoin surpassing $120,000 to reach an all-time high and Ethereum also breaking the $3,400 mark. However, behind this price rise are not merely speculative movements, but structural factors such as institutional development, technological innovation, and changes in the regulatory environment. This paper analyzes recent market trends from multiple perspectives and examines the challenges and opportunities facing the crypto asset industry.

Market Overview and Price Trends

The price of Bitcoin is currently hovering around $118,000. This is well above its previous highs, and according to crypto asset analysis firm Glassnode, there is statistical room for the price to reach $130,000 before historical demand saturates.

Interestingly, the prices have broken through the $93,000 to $97,000 and $104,000 to $110,000 price points, which had previously served as resistance bands. From a technical analysis perspective, these price zones are likely to convert into strong support lines in the future. This means that even if prices fall, there is a strong likelihood of buying again at these levels.

This phenomenon is noteworthy as an indication of the maturation of the crypto asset market. In the past, large price increases were often followed by sharp adjustments, but the current market has been relatively stable. This can be attributed to the entry of institutional investors and the penetration of more sophisticated investment strategies.

Ethereum's price trend has also shown a noteworthy development: on July 17, Ethereum temporarily surpassed $3,400, reaching its highest level in almost six months, which means more than just a price increase. Behind this rise is the strong inflow of funds from institutional investors into physical ethereum ETFs.

The U.S. physical ethereum ETF saw record net inflows of $726 million on Wednesday, a record high since the start of trading. This brings the monthly net inflows for July to over $2.2 billion, also a record high. These numbers indicate that institutional investors are beginning to recognize Ethereum as a long-term investment.

Even more noteworthy is the move by listed companies to hold ethereum as a reserve asset. Sharplink Gaming, in which Consensus has a stake, has continuously bought more ETH, making it the largest holder, surpassing the Ethereum Foundation. This is symbolic of the changing position of crypto assets in corporate finances.

In conjunction with Ethereum's surge, other major altcoins such as XRP and Solana (SOL) have also risen. Meanwhile, Bitcoin's price has moved only modestly and its share of the market has been declining. Currently, bitcoin's dominance (market share) stands at about 62.5%, which is below its level in early 2024.

Analysts have suggested that this phenomenon signals the beginning of a full-blown “altcoin season”. An altcoin season refers to a period of relatively good performance for crypto assets other than Bitcoin. This is usually understood as a phenomenon that reflects the maturation and diversification of the overall market.

Expanding Stablecoin Presence

The most notable development in the stablecoin market has been the expansion of USDT supply by Tether Inc. The company issued $2 billion worth of new USDT, bringing its total supply to a record $160 billion. This is expected to contribute significantly to the overall liquidity of the crypto asset market.

According to Tether CEO Paolo Ardoino, the new issuance is positioned as an “inventory replenishment” on the Ethereum blockchain, in preparation for future demand. It will not be immediately distributed to the market, but it will prepare the supply system in the event of increased demand.

Notably, $1 billion of the newly issued USDT has been transferred to the crypto exchange Binance. This is indicative of increased trading activity and reflects the growing demand among market participants.

According to Tether's Q2 2025 report, assets related to U.S. Treasuries account for more than $127 billion of the company's reserves. This is comparable in size to the government of a single country, or if it were a nation, it would be the world's 18th largest holder of U.S. Treasuries.

This fact indicates that stablecoin issuers play an important role in the financial system. At the same time, the concerns behind regulators' increased scrutiny of stablecoins are understandable. In fact, as discussed below, the U.S. Congress is debating a bill on the regulation of stablecoins.

While Tether insists that the tokens it issues are always fully backed by assets, there is an ongoing debate about its transparency and auditing regime. CEO Aldoino emphasized that this supply achievement is proof of USDT's usefulness as a digital dollar, especially in emerging economies.

Changing Regulatory Environment and Legal Developments

An important development regarding crypto asset regulation in the United States is the ongoing consideration of several bills in the House of Representatives. This week has been dubbed “Crypto Week,” and a plenary vote is scheduled to take place on a series of bills, including a stablecoin regulatory bill.

The three bills to be discussed are the GENIUS bill, which establishes a regulatory framework for stablecoins; the Clarity bill, which clarifies the regulation of digital assets in general; and the anti-CBDC bill, which would prevent the issuance of central bank digital currency (CBDC). These bills were once rejected, but have been revived with the passage of procedural votes.

The GENIUS bill in particular has already passed the Senate and could be signed by President Trump this week. Passage of this legislation is expected to clarify the legal status of stablecoins and promote the healthy development of the industry.

The passage of these bills could have a significant impact on the future of the crypto asset industry in the United States. Clarification of regulations will allow companies to conduct business while mitigating legal risks. At the same time, it is expected to create an environment that will make it easier for investors to make investment decisions.

Initially, some Republican legislators opposed the GENIUS bill due to concerns that it would allow the issuance of CBDC, but the issue was reportedly resolved when the Republican leadership announced its intention to include the CBDC prohibition provision in a separate defense-related bill. While this is the result of a political compromise, it is a positive development for the industry.

Technological Innovation and Challenges for the Future

One of the long-term challenges facing the crypto asset industry is the threat of quantum computers. A new upgrade proposed by a group of bitcoin developers aims to protect the network from future quantum computer attacks.

According to the proposal, approximately 25% of the total Bitcoin supply is at risk of attack. This refers to bitcoins stored at older types of addresses whose public keys have already been published, which could put these assets at risk in the event of future high-performance quantum computers.

The developers propose a three-step plan to adapt the network to quantum computers. First, they would encourage migration to a new, secure address type, and then, after a period of time, disable transfers from the old type of address. The final phase of the plan also includes a means of recovering funds for users who missed the transition.

The proposal has been met with some concern from the community. Of particular concern is the possibility that the assets of dormant accounts that have been inactive for an extended period of time would effectively be confiscated. This could include coins allegedly associated with Bitcoin founder Satoshi Nakamoto.

One of the proponents, Jameson Rupp, argues that "If nothing is done, these dormant wallets are at the same risk of being targeted by malicious attackers. This highlights the dilemma that arises between technical security and personal property rights.

This argument illustrates the fundamental challenge facing crypto assets. A community-wide consensus is needed to address technological threats while maintaining the benefits of a decentralized system. The future of the debate will have important implications for the future of Bitcoin.

Convergence with AI Technology and New Investment Opportunities

Another aspect of technological innovation is the convergence of AI technology and the crypto asset market. The new “companion mode” feature introduced by xAI, an AI company led by Elon Musk, in its interactive AI “Grok,” is an example of this trend.

The companion mode provides users with the ability to interact with 3D characters via voice. The characters, “Ani,” “Rudy,” and “Valentine,” have different voices, personalities, and interaction styles. This allows users to enjoy a more personalized experience.

The announcement of this new feature has had a significant impact on the crypto asset market as well as the technology sector. When the first companion character, the Ani-themed meme coin $ANI, hit the market, speculative money flooded in, causing the price to soar more than 1000-fold in the first three days of its release.

Such extreme price volatility once again highlights the speculative nature of meme coins. With the emergence of Rudy and Valentine-themed meme coins, technological innovations in the AI domain are creating new speculative targets.

Currently, the companion mode is available only for iOS applications, and no date has been set for an Android version. As the technology spreads, the associated meme coins will also be a focus of attention.

It is important for investors to understand that this phenomenon is a byproduct of technological innovation and to properly assess the risks. While extreme price volatility has the potential for large gains, it also carries the risk of equally large losses.

Market Maturation and Future Outlook

One of the most notable changes in the crypto asset market is the full-scale entry of institutional investors. The continued inflows into physical Bitcoin ETFs and physical Ethereum ETFs are a clear indication of this trend. This is not merely a speculative move, but rather a sign that crypto assets are being positioned as part of a long-term investment strategy.

The holding of crypto assets by companies as reserve assets is also growing. MicroStrategy has been a pioneer so far, and more companies are expected to follow. Some companies, such as Sharplink Gaming, are diversifying, with some holding large amounts of Ethereum.

The maturation of the market is also closely linked to the development of the technological infrastructure. The expansion of the supply of stablecoins has contributed significantly to the liquidity of the crypto asset market. In addition, the emergence of various ETFs is bridging the traditional financial system and the crypto asset market.

At the same time, there are long-term technical challenges, such as dealing with the threat of quantum computers. Addressing these challenges will be critical to the future of crypto assets. As technology advances, continuous improvements in security will be required.

The regulatory environment is also steadily improving, as evidenced by legislation being debated in the U.S. Congress. This is an essential element for the healthy development of the industry. Clarification of regulations will allow companies to develop their businesses while mitigating legal risks, and will also create an environment that makes it easier for investors to make investment decisions.

However, striking a balance between regulation and innovation is not easy. Excessive regulation may stifle technological innovation, while inadequate regulation may lead to market turmoil. Continuous dialogue between regulators and the industry is critical to creating an appropriate regulatory environment.

Summary

The crypto asset market is a complex situation in which price increases, institutional developments, and technological innovations are occurring simultaneously. Bitcoin's all-time high and Ethereum's significant rise reflect structural changes, such as the full-scale entry of institutional investors and the development of the regulatory environment, rather than mere speculative activity.

The expansion of the supply of stablecoins has contributed to increased liquidity in the market, and the deliberation of legislation in the U.S. Congress is an important step toward a clearer regulatory environment. On the other hand, there are still issues to be resolved, such as the response to quantum computers and extreme volatility in the meme coin market.

The crypto asset market is expected to develop in the future as a result of both technological innovation and regulatory development. It is important for investors to understand these structural changes and make investment decisions with appropriate risk management. As the market continues to mature, we have entered an era that requires more sophisticated investment strategies.

The crypto asset industry remains in its infancy and many changes are expected in the future. Ongoing dialogue and cooperation among industry participants, regulators, and investors is essential to adapt to these changes and support healthy market development.

Disclaimer
This article is for informational purposes only and is not a solicitation to invest. Crypto assets are risky and you should check the latest information at your own risk.