The price of Bitcoin could see a short-term correction after reaching a record high last month, but the long-term growth potential of the digital asset market remains intact, particularly within the Ethereum ecosystem, says Merkle Capital.
While Bitcoin and the broader crypto market may face short-term volatility in August, there is strong potential for long-term growth, especially for the Ethereum ecosystem, said Woramet Chansen, an investment advisor at Merkle Capital.
In July, the price of Bitcoin reached a new all-time high of US$123,000, triggering a rally in the broader digital asset market. Ethereum surged more than 60%, marking its highest level in seven months as it signalled steadily growing investor demand.
Mr Woramet said this positive outlook is driven by three factors: an expected decline in US interest rates, the passage of the Genius Act in the US, and rising institutional demand for Ethereum.
Other supporting factors include an easing of concerns over US trade tariffs and the release of the White House Digital Asset Report.
The Genius Act is a US federal law that establishes a regulatory framework for stablecoins, a type of cryptocurrency backed by stable assets such as the US dollar.
However, sentiment for risk assets continues to be clouded by concerns over the US economic outlook, he said.
Bitcoin is likely entering a cooling period in August, but sustained growth in the second half of the year is expected, said Mr Woramet.
Recent revisions to US non-farm payroll data point to a weakening labour market, sparking speculation the Federal Reserve will lower interest rates three times this year and possibly twice more in 2026.
While these economic concerns pressure risk assets in the short term, increased liquidity from rate cuts is expected to support medium- to long-term investment flows into the crypto market, he said.
“Short-term volatility presents a window for accumulation,” said Mr Woramet. “As macro conditions soften, digital assets are poised to benefit from renewed investor appetite.”
Meanwhile, the recent approval of the Genius Act marks a turning point for stablecoins, making them more accessible and secure.
As most stablecoins are backed by dollars or treasuries, this legislative green light is expected to increase demand for dollar-backed digital assets, indirectly expanding stablecoin market capitalisation, he said.
A larger stablecoin market enhances the on-ramp infrastructure for other cryptocurrencies, improving liquidity and lifting demand for similar assets such as Ethereum and Solana, said Mr Woramet.
Ethereum’s July rally to more than $4,000 was fuelled by record inflows into Ethereum spot exchange-traded funds and increasing speculation that stablecoin adoption will grow, according to Merkle.
Despite the price surge, Ethereum still claims a market share of only 12%, well below historical highs of 20-22%, suggesting room for further upside, he said.
“Current valuations are supported by real institutional demand, something that was missing in past bull runs,” said Mr Woramet.
“We believe this positions Ethereum for continued growth in August and beyond.”
While short-term pullbacks remain likely amid global macro uncertainty, Merkle maintains a bullish long-term view on crypto, particularly Ethereum-related assets.
Growing regulatory clarity, favourable monetary policy, and increased institutional participation are aligning to reshape the digital asset landscape in the second half of the year, he said.
