Ethereum Is Soaring. 3 Reasons Investors Should Pay Attention.

Key Points

• Ethereum is now up 65% over the past 30 days, and is starting to decouple from Bitcoin.

• Ethereum's recent performance could signal the arrival of "altcoin season," when risky, speculative cryptocurrencies tend to outperform.

• New crypto legislation is opening up high-growth opportunities for Ethereum in areas such as stablecoins.

• 10 stocks we like better than Ethereum ›

Seemingly out of nowhere, Ethereum (CRYPTO: ETH) has become one of the hottest cryptocurrencies on the planet. It's now up 65% over the past 30 days, and analysts are busy ratcheting up their price targets for just how high Ethereum might go in 2025 and beyond.

Ethereum's rapid rise over the past few months could have important implications for your investment portfolio. Here are three reasons why investors should be paying attention.

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The arrival of "altcoin season"?

Ethereum's rise has been so meteoric that it is now outpacing Bitcoin (CRYPTO: BTC), which is only up 15% over the past 30 days. This isn't supposed to happen. Historically, there has been a very tight correlation between price movements in Bitcoin and Ethereum.

As a result, some investors are already starting to suggest that Ethereum's decoupling from Bitcoin could signal the arrival of "altcoin season." This is the time of the year when investors shift away from Bitcoin and into riskier, more speculative cryptocurrencies (such as viral meme coins) in search of higher returns.

Image source: Getty Images.

Typically, the first tell-tale sign of "altcoin season" is when Ethereum starts to overheat. This is then followed by money flowing into riskier and riskier cryptocurrencies, until a vast speculative bubble starts to form. If history is any guide, this is what could be happening now.

Already, investors are starting to talk up the types of cryptos that might "pop" during this altcoin season. So, any vacation you might have planned during August could be the perfect time to think about ways you can diversify your portfolio away from Bitcoin in order to capture some of this potential upside.

New momentum for Ethereum in two key areas

Two new pieces of crypto legislation -- the Genius Act and the Clarity Act -- are now passing through Congress, and hopes are already building about what this could mean for Ethereum. The thinking here is that the combination of the Genius Act (which governs stablecoins) and the Clarity Act (which provides a regulatory framework for all digital assets) might create a sort of "perfect storm" for Ethereum's future development.

That's because Ethereum is a powerhouse when it comes to both stablecoins and decentralized finance (DeFi), and these are exactly the two areas of the crypto market that this new legislation is designed to help.

With that in mind, investors need to keep their eyes open for new investment opportunities that involve DeFi, and especially those that involve stablecoins. The hype around stablecoins might be a bit overblown, but even the most cynical investor has to admit that something huge is happening here. Stablecoins have grown from a sleepy $20 billion industry in 2020 to a $250 billion industry today. And Treasury Secretary Scott Bessent thinks stablecoins could hit $2 trillion within just a few years.

A new way to invest in Ethereum

Finally, keep your eyes open for new ways to invest in Ethereum. Arguably, the most exciting of these opportunities are the new Ethereum Treasury Companies that have been appearing ever since the end of May. There are now three publicly traded companies -- Bitmine Immersion Technologies (NYSEMKT: BMNR), Bit Digital (NASDAQ: BTBT), and SharpLink Gaming (NASDAQ: SBET) -- that have ditched their old business models and gone all-in on Ethereum. And one more -- The Ether Machine -- is on its way.

The goal of these companies is to become "the Strategy (NASDAQ: MSTR) of Ethereum." Strategy has become one of the top-performing publicly traded companies in the world by building up a massive Bitcoin position on its balance sheet. In a similar way, companies are now racing to amass Ethereum on their balance sheets, in the hopes of delivering similar types of performance.

For investors, this opens up new possibilities. It might be the case, for example, that you can earn higher returns by investing in these Ethereum Treasury Companies than by investing in Ethereum itself.

Before you invest in Ethereum

Does all this sound too good to be true? Maybe it is. After all, even though Ethereum has turned in some blistering performance of late, it's still only up 10% for the year. If you look at a chart for Ethereum for 2025, you'll see that it's been a roller coaster ride. Ethereum was on a rapid downward path for the first five months of the year, and is now rising nearly as fast on the upside.

As a result, some of the updated price forecasts for Ethereum might be overly optimistic. The all-time high for Ethereum is under $5,000, but some are already predicting that Ethereum could hit $15,000 soon. That just doesn't seem to be realistic. So before you invest in Ethereum, make sure you do your due diligence.

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Dominic Basulto has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.