A New Era of Institutional Investor-Driven Crypto Asset Markets, as Seen from the $4 Trillion Breakthrough and the Arrival of the Alt Season, as a Result of U.S. Regulatory Improvements

 

Introduction

The entire digital asset ecosystem is entering a new phase of growth due to a combination of multiple factors, including the development of the regulatory environment in the United States, the dramatic expansion of market size, and the accelerated entry of institutional investors. This paper provides a detailed analysis of the most recent series of important developments and discusses their implications.

Historic Shift in U.S. Crypto Asset Regulation

The U.S. House of Representatives has passed three bills of critical importance to the crypto asset industry. These bills provide clear guidance in the long-unclear U.S. digital asset regulatory environment.

The first notable bill is the passage of the “GENIUS Act” (Guidance, Enforcement, and Nonprofit Stablecoins Act). This bill provides a comprehensive framework for the regulation of stablecoins, specifically requiring that stablecoins be fully backed by assets such as US dollars. The overwhelming majority of 308 votes in favor and 122 votes against the bill indicates that more than 100 members from both the Democratic and Republican parties voted in favor of the bill. This bipartisan support illustrates that the importance of stablecoins and the need for regulation is recognized across political lines.

The Clarity for Payment Stablecoins Act (CLARITY Act) is equally important. The bill aims to clarify the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) and establish a structural framework for the entire digital asset market. Passage with 294 votes in favor and 134 votes against indicates that approximately 80 Democrats supported the bill, indicating high expectations for clarity regarding the division of roles among the regulatory agencies.

The most controversial bill was the Anti-CBDC Surveillance State Act, a bill that would have required the Federal Reserve Board to provide a more detailed definition of the role of regulators in the regulatory process. This bill, which would prohibit the Federal Reserve from issuing central bank digital currency (CBDC) directly to individuals, passed by a narrow margin of 219 votes in favor and 210 votes against. This outcome reflects the delicate balance between calls for privacy protection and financial freedom and calls for proper financial controls by the government.

The reaction of industry players to the passage of these bills has been generally positive. Emily Choy, president of Coinbase, a major crypto asset exchange, called it “a major step toward solidifying U.S. dominance in crypto assets and innovation in general.” This statement represents the industry's hope that regulatory clarity will increase the U.S. competitive advantage in the digital asset sector.

Republican Senator Tim Scott also stated that “the GENIUS Act is a bold step to promote innovation and consumer protection for payment-stable coins” and expressed the view that the regulatory environment will enable both technological innovation and user protection.

The focus will now shift to the Senate. The GENIUS Act has already passed the Senate in June and is expected to be signed into law by President Trump if no major amendments are made. This means that the establishment of stablecoin regulation has entered the practical stage.

On the other hand, the CLARITY Act and the anti-CBDC surveillance state bill will need to be debated and possibly amended in the Senate. The anti-CBDC bill, in particular, which passed by a narrow margin, is expected to continue to be the subject of intense debate between those who support it from the standpoint of privacy protection and those who call for proper financial management by the government.

Crypto Asset Market Reaches All-Time High

On July 18, 2025, the market capitalization of the entire crypto asset market reached $4 trillion for the first time in history. This figure, confirmed by leading data site CoinGecko, indicates that the growth of the digital asset market has entered a new phase.

This $4 trillion level has significance beyond mere numerical records. The breakthrough from the previous high of $3 trillion indicates a recovery in confidence among market participants and a sustained inflow of new funds. Especially in the current market environment, where institutional investors are accelerating their participation, this record market capitalization achievement speaks to the fact that digital assets are becoming established as an investment vehicle alongside traditional financial assets.

Bitcoin continues to reach record highs day after day, and its strong price movement is boosting overall market sentiment. This sustained price increase can be attributed to a combination of factors, including the entry of institutional investors, an improved regulatory environment, and greater integration with the traditional financial system.

Ethereum, the second largest market cap currency, has also recovered to its highest price level since January 2025, further cementing the optimistic mood in the market. Ethereum's price recovery reflects the overall health of the ecosystem, including the growth of decentralized finance (DeFi) applications and the booming non-alternative token (NFT) market.

Of particular note is the trend in Ripple (XRP), where XRP has gained nearly 20% in the past 24 hours, reaching a price of $3.6 per XRP. This is a historic price break above the all-time high of $3.3 recorded in January 2018, and the first time in nearly seven and a half years that a record has been achieved.

The price increase can be attributed to hopes for a resolution of the long-running legal battle between Ripple and the SEC, as well as a reassessment of its utility in the international money transfer market; XRP's rapid price rise is a symbolic example of how regulatory clarity can have a significant impact on the market.

Signs of the Coming Alt Season

Noted crypto asset influencer BATMAN suggests that a full-blown “alt season” is upon us. He notes that bitcoin dominance (market share) has broken below the bullish trend line, which he analyzes as an important signal that signals the beginning of an altcoin bull market over the next few months.

Bitcoin dominance is a measure of bitcoin's share of the overall market capitalization of the crypto asset market. A decline in dominance means that money is flowing out of bitcoin and into other cryptocurrencies. batman predicts that dominance will fall to around 61%, and actual data currently shows it at 61.8%.

In past bull markets, when dominance, which was heightened by rising bitcoin prices, began to decline, the funds circulated into the altcoin market and an alt season began. This pattern has been confirmed in the bull market of 2017-2018 and in the market of 2021.

Current market conditions are likely to replicate that very historical pattern. The tendency for investor interest to turn toward relatively undervalued altcoins after bitcoin has seen sufficient price appreciation is understood as a natural market cycle.

The arrival of the alt season signifies the diversification and maturation of the overall crypto asset market. The overall health of the market may improve as investment funds that were concentrated in Bitcoin are diversified into Ethereum, XRP, and other promising altcoins.

In addition, rising altcoin prices indicate market acceptance of each project's unique value proposition and technical characteristics. This speaks to the evolution of the crypto asset market from a mere speculative target to a place of value creation based on utility and technical innovation.

Ethereum ETF Breakthrough

On July 17, 2025, a historic event occurred when inflows into physical ethereum ETFs exceeded inflows into physical bitcoin ETFs. This indicates that institutional and individual investor interest may be shifting from bitcoin to ethereum, the second largest.

Specifically, a total of $602 million flowed into all physical ethereum ETFs traded on the U.S. market, compared to only $522 million in cash bitcoin ETFs. This difference of approximately $0.08 billion indicates a change in the composition of the market, which has always been dominated by bitcoin ETFs.

The iShares Ethereum Trust (ETHA), offered by BlackRock, the world's largest asset manager, led this record inflow. This was a staggering figure, accounting for more than 90% of the total inflows for all Ethereum ETFs on the same day.

This figure is also the highest daily inflow ever for ETHA. Even more noteworthy, the day before, July 16, ETHA also saw a then-record inflow of $499 million, setting a new inflow record for the second day in a row.

This consecutive large inflow of funds can be considered a sign that market participants, especially institutional investors, have strong confidence in the future potential of ethereum. Ethereum serves as a platform with diverse uses, including decentralized finance (DeFi), non-alternative tokens (NFT), and decentralized applications (DApps).

Institutional investors are interested in Ethereum because of its technical innovation and practicality. While Bitcoin plays the role of value preservation as “digital gold,” Ethereum serves as “digital oil,” a platform that runs a variety of applications. This difference may be attractive to institutional investors looking to diversify their investment strategies.

NFT's Expansion into the Real World

The launch of Pudgy Toys, a toy series from the popular NFT project Pudgy Penguins, in Don Quijote stores has been noted as a symbolic event that marks the full-scale entry of a brand derived from NFT into the major Japanese physical retail market. Pudgy Penguins is a brand that has been in the spotlight for some time now.

Pudgy Penguins began as a digital art collection featuring cute penguin designs, but has now expanded into a variety of other businesses. Recently, the company announced the release of its new game “Pudgy Party” on iOS, which uses a game system similar to the popular game “Fall Guys,” and has rapidly expanded its activities, including a partnership with leading Chinese pop culture and entertainment company Suplay Inc. a major Chinese pop culture and entertainment company.

The launch of sales at Don Quijote is indicative of the NFT project's evolution from a mere digital collection to a brand that offers actual products and services. This development suggests the arrival of an era in which the value of NFT will be evaluated not only on the basis of speculative factors but also on the basis of practical value creation.

It has not been disclosed which product lines are currently being carried by Don Quijote, but it has been confirmed that palm-sized collectible figurines are being sold. These physical products serve as a bridge to bring the appeal of digital art into the real world.

Luca Netz, founder of Pudgy Penguins, has characterized this foray into the Japanese market as “the beginning of our Asian expansion” and has stated that "the future is in Asia. This statement indicates the rapidly growing importance of the Asian market for the NFT project.

The success of the project has been recognized by the market, with the $PENGU, the relevant currency of the ecosystem, recording a 225% price increase in one month. Such successes serve as a model case for other NFT projects to demonstrate the importance of real-world deployment.

Large Investors and Their Impact on the Market

The event that a large investor who has held bitcoin since around 2011 broke his 14-year silence and moved all of his approximately 80,000 BTC (about $9.5 billion, or about 1.4 trillion Japanese yen) has sent shockwaves through the market. This large holder is the so-called “whale,” and its movements could have a significant impact on the market as a whole.

According to data on the blockchain, this large address began moving bitcoins again around 7:00 AM on July 18, 2025, moving a total of 40,192 BTC to Galaxy Digital, a leading crypto asset financial services company. Ultimately, the entire bitcoin move was completed in three days.

The returns generated by this asset are staggering: the initial value of the over 80,000 BTC asset was reportedly only $132,000. Over the past 14 years, it has grown to approximately $9.5 billion, an increase of almost 72,000 times.

This figure is emblematic of the explosive increase in value that bitcoin has brought from its early days to the present. It is also a concrete example of the power of long-term investment, which is instructive for many investors.

The market's biggest concern is whether or not this massive amount of bitcoin will be sold. On-chain data confirms that 2,000 BTC (equivalent to about $236 million), a portion of which was deposited into the major crypto asset exchanges Bybit and Binance, from an address associated with Galaxy Digital, which received the assets.

This is usually viewed as preparation for a sale, and there are concerns about the impact on the market. If large amounts of bitcoin are released into the market, it could result in strong selling pressure. As a reference case, when the German government sold approximately 50,000 BTC seized in mid-2024 on the market, the bitcoin market continued to experience heavy upside.

However, unlike the ongoing sales by government agencies, this time it is believed to be a profit-taking move by the initial holders. The current market environment is very different from that of 2024. With the accelerated entry of institutional investors and the continued inflow of funds through ETFs, the current market may have significantly improved its ability to absorb temporary selling pressure.

This selling by large investors may also contribute to improved market liquidity. The supply of assets that have been stuck in the market for an extended period of time may improve the price discovery function and contribute to healthier market formation.

Comprehensive Market Analysis and Outlook

The crypto asset market today is a complex situation with several important factors acting simultaneously. The development of the regulatory environment in the U.S., the market size reaching all-time highs, the accelerated entry of institutional investors, and the real-world expansion of individual projects are all interacting with each other to drive market growth.

The regulatory environment has contributed to increased market confidence and accelerated institutional investor participation. In particular, the establishment of a clear regulatory framework for stablecoins could contribute significantly to the widespread use of virtual currencies as a means of payment.

The fact that Ethereum ETFs have recorded higher inflows than Bitcoin ETFs indicates that institutional investors are diversifying their investment strategies. The trend of investment capital previously concentrated in Bitcoin being diversified into other digital assets, including Ethereum, is an important change that will lead to the maturation and improved health of the market.

This trend indicates that investors are gaining a deeper understanding of the technical characteristics and utility of digital assets and making investment decisions based on this understanding. The shift from merely speculative to fundamentals-based investing has important implications for the long-term stability of the market.

The real-world deployment of the NFT project is an example of the pursuit of practicality of blockchain technology; success stories such as Pudgy Penguins show that digital assets are not merely speculative objects, but can contribute to real value creation.

Such developments are an important factor for the sustainable growth of the crypto asset and blockchain industry as a whole. The long-term development of the market will be possible not only through technological innovation, but also through the creation of actual use value.

The increasing focus on the Asian market, especially the Japanese market, indicates that the globalization of the crypto asset market is accelerating. The increasing importance of the Asian market, as well as the Western European market centered on the U.S., could improve the diversity and stability of the market.

The regulatory environment in Japan is also improving, and this is facilitating the entry of foreign projects into the Japanese market. It is expected that such international developments will further accelerate in the future.

Future Prospects and Challenges

In the short term, the arrival of the alt season is expected to boost prices of crypto assets other than Bitcoin. In particular, there could be increased interest in projects with technical innovation and utility.

The impact of selling pressure from large investors on the market should also be closely monitored. However, the current market environment is likely to improve the absorption capacity for temporary selling pressure.

In the medium to long term, the institutional foundation of the crypto asset market will be strengthened as the regulatory environment becomes more conducive. This will create an environment in which more institutional and individual investors can safely enter the market.

In addition, the success of projects that focus on practicality may accelerate the social implementation of crypto assets and blockchain technology. This is an important factor for the sustainable growth of the market.

On the other hand, several challenges remain. Although the regulatory environment is well developed, international coordination and standardization may take time. In addition, technical scalability issues and environmental impacts need to be continuously improved.

Furthermore, as the market matures, investor education is becoming increasingly important. Investment decisions based on proper knowledge and understanding will help maintain the health of the market.

Summary

The development of the regulatory environment in the U.S., the market size reaching all-time highs, the accelerated entry of institutional investors, and the practical application of technological innovations - these factors are interacting to form a new growth phase for the crypto asset market.

These trends indicate that the crypto asset and blockchain industry is evolving from a speculative phase to a mature market based on utility and value creation. With continued technological innovation and the regulatory environment, this market is likely to continue to grow sustainably in the future.

However, continued learning and adaptation by investors will be essential to keep pace with the rapid changes in the market. In addition, technical challenges and regulatory uncertainties must be addressed by the industry as a whole.

The overall trend can be positioned as a significant event that heralds the dawn of a new era in the crypto asset market. With all eyes focused on future developments, it is important that market participants take a cautious and strategic approach.

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.