Ethereum (ETH) has had an incredible month in July, gaining more than 60% in just a few weeks. The price jumped from around $2,400 on July 1 to nearly $3,941 by July 27. While many thought this rally came from investors selling Bitcoin (BTC) and moving their funds into Ethereum, on-chain data tells a different story. According to experts, Ethereum’s surge is powered by fresh money entering the market, not by Bitcoin holders shifting positions.
Ethereum Rally Driven by Fresh Capital
Carmelo Aleman, a contributor to CryptoQuant, explained in a recent post that the idea of money moving from Bitcoin to Ethereum doesn’t match what’s happening on-chain. He highlighted the Bitcoin Realized Cap metric to support his argument.
For those unfamiliar, Bitcoin’s Realized Cap looks at the value of each Bitcoin at the price it was last moved, not its current market price. This gives a clearer picture of how much actual money has been invested into Bitcoin over time.
According to the data, Bitcoin’s Realized Cap hit a new all-time high of $1.018 trillion on July 25. This means more money is still going into Bitcoin, rather than being taken out. If Ethereum’s gains were caused by people cashing out of Bitcoin, we’d expect the Realized Cap to drop — but that’s not happening.
In fact, Bitcoin’s Realized Cap continues to rise, even while ETH’s price moves higher. Aleman noted that when Bitcoin’s price stalls, it’s often because investors are accumulating more BTC, which is usually followed by another rally.
So, rather than being a result of Bitcoin sell-offs, Ethereum’s rise seems to be based on growing interest and positive developments within its own ecosystem.
Ethereum Ecosystem Sees Renewed Interest
Looking beyond price charts, several data points show that investors are becoming more interested in Ethereum again.
One major indicator is the Total Value Locked (TVL) in Ethereum-based decentralized finance (DeFi) projects. TVL is a measure of how much money is currently stored in DeFi applications. According to data from DefiLlama, TVL in Ethereum has jumped from $49 billion on April 29 to a huge $84.6 billion by July 29. This shows that users are actively returning to Ethereum’s DeFi platforms and investing real funds.
In addition, on-chain activity is picking up. Ethereum is handling more daily transactions, indicating increased network use. Etherscan.io reported nearly 1.48 million transactions on July 27 alone, showing strong network demand.
Another factor pushing ETH prices higher is a growing shortage of Ethereum available for trading. Over the past month, reserves of ETH on centralized exchanges have dropped by about 1 million coins. This supply reduction is often referred to as a “supply crunch,” which can push prices up as demand grows.
Also, more ETH is being locked in liquid staking protocols. Currently, 35.5 million ETH is staked, which is a record high. This reduces the number of ETH available to trade, further tightening supply and potentially boosting price.
Ethereum Not Dependent on Bitcoin Movement
Aleman’s analysis is important because it challenges the common idea that altcoin rallies — like Ethereum’s — are always tied to Bitcoin’s price action. In this case, Ethereum is not simply riding Bitcoin’s coattails. Instead, it’s showing signs of strength on its own.
With Bitcoin’s Realized Cap still climbing, it’s clear that investors are not pulling funds from BTC to buy ETH. Instead, Ethereum appears to be attracting new investors, thanks to renewed confidence in its future and a stronger ecosystem.
As more users return to Ethereum-based apps, lock up their ETH for staking, and trade on the network, the fundamentals appear to support continued growth.
At the time of writing, Ethereum is trading at around $3,772 — slightly down by 1% in the last 24 hours, but still up significantly for the month.
Conclusion
Ethereum’s July rally is not just a result of shifting money from Bitcoin. On-chain data makes it clear that new money is flowing directly into Ethereum. The network is seeing strong growth in DeFi, more transaction activity, lower exchange reserves, and a record number of ETH staked.
All of these signs suggest that Ethereum is building momentum on its own — not just following Bitcoin’s lead. While short-term dips may occur, the long-term outlook remains strong if this trend of fresh capital and user interest continues.
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