Ethereum: The Comeback Kid of 2025

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By Juan Leon, CFA

Ethereum stands to benefit from several big trends in 2025. One of the biggest: the $100 trillion market for real-world assets.

Two key stories dominated crypto headlines in 2024: Bitcoin’s meteoric rise, fueled by the launch of bitcoin ETFs and record-breaking inflows, and Solana’s emergence as a retail darling, driven by meme coin speculation.

This left Ethereum—the world’s second-largest crypto asset—largely overlooked. Sure, its 66% year-to-date return is good in an absolute sense, but it pales in comparison to Solana’s 106% and Bitcoin’s 130%.

But something interesting has been happening recently: Over the past 10 days, investors have started warming up to Ethereum again.

You can see this most clearly in spot Ethereum ETFs, which have pulled in a whopping $2 billion in net flows over that time frame. By comparison, the same ETFs experienced net inflows of only $250 million over the preceding four months.

So what’s going on here?

The realization struck me as I was reviewing Bitwise’s recently published 2025 Predictions. Amidst various price predictions, we called out several “real-world” mega-trends that we think will shape the industry in the year ahead, from the continued rise of stablecoins to the proliferation of AI agents transacting in crypto.

But one of the biggest and most overlooked opportunities centers on tokenization: the process of bringing the massive market for real-world assets (RWAs) onto a blockchain.

And that market today is dominated by Ethereum.

“It’s Not Just a Tomorrow Story”

Tokenization refers to the process of digitizing traditional financial assets, such as Treasury bills or real estate, as tokens that can be exchanged on a blockchain. Tokenization promises to make buying, selling, and settling financial assets faster, cheaper, and more natively digital. Many think it could disrupt the fundamental underpinnings of how financial markets work.

And it’s not just a tomorrow story. Tokenized assets are growing fast right now, with firms like BlackRock, UBS, and others bringing tokenized real-world assets online, across government securities, commodities, real estate, private equity and more. BlackRock, for instance, has a $578 million tokenized Treasury fund, and it’s looking to do more. We think tokenized fund assets will triple next year, with Ethereum as the driving force behind it. 

Why Ethereum?

To adapt an old saying: You don’t get fired for building on Ethereum.

Ethereum is the most battle-tested, secure, and decentralized of the smart-contract platforms. It’s been around since 2015 and has established itself as a leader in decentralized applications, smart contracts, and tokenization. It currently holds a commanding 81% market share in tokenized assets, and its long track record and large, distributed validator network gives asset managers confidence in its security and reliability as they migrate assets on-chain.

And here’s the thing: It’s difficult to overstate just how big the RWA market is. Real-world assets are worth roughly $100 trillion globally. It will take time—perhaps decades—for much of that to move to tokenized rails. But if it does, fees from RWA-linked assets could exceed $100 billion per year. That’s more than 40x Ethereum’s total year-to-date fees of $2.4 billion. With the incoming pro-crypto SEC expected to provide the regulatory clarity needed to accelerate tokenization, investors who stake a claim on Ethereum now may find themselves handsomely rewarded in the period ahead.

That’s just one reason among many why we think 2025 is the year Ethereum gets its groove back.

Risks and Important Information

No Advice on Investment; Risk of Loss: Prior to making any investment decision, each investor must undertake its own independent examination and investigation, including the merits and risks involved in an investment, and must base its investment decision—including a determination whether the investment would be a suitable investment for the investor—on such examination and investigation.

Crypto assets are digital representations of value that function as a medium of exchange, a unit of account, or a store of value, but they do not have legal tender status. Crypto assets are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies, stocks, or bonds.

Trading in crypto assets comes with significant risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks and risk of losing principal or all of your investment. In addition, crypto asset markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing.

Crypto asset trading requires knowledge of crypto asset markets. In attempting to profit through crypto asset trading, you must compete with traders worldwide. You should have appropriate knowledge and experience before engaging in substantial crypto asset trading. Crypto asset trading can lead to large and immediate financial losses. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price.

The opinions expressed represent an assessment of the market environment at a specific time and are not intended to be a forecast of future events, or a guarantee of future results, and are subject to further discussion, completion and amendment. The information herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice, or investment recommendations. You should consult your accounting, legal, tax or other advisors about the matters discussed herein.