From $107K to $123K: The Q2 Foundation That Launched Crypto’s Most Explosive Rally

Bitcoin shattered records in early Asian trading Monday, blasting past USD 123,000 and setting a new all-time high — but it’s not the only headline stealer this week. 

Fuelled by soaring institutional interest, record ETF inflows, and the buzz around “Crypto Week” kicking off in Washington, the OG crypto is riding a wave of optimism. Companies like Japan’s Metaplanet are doubling down — adding another 797 BTC to their balance sheet, bringing their total holdings to a whopping 16,352 Bitcoins. 

Chart 1: Bitcoin Price Movement – Last 7-days

Source: Coingecko, July 15, 2025  

But in a twist, that’s impossible to ignore, Bitcoin’s historic rally is being outshined by altcoins. ETH has jumped nearly 20%, SOL is up 15%, XRP is soaring with a 35% gain, and SUI is up 30% in just seven days. Behind the scenes, institutions appear to be reshuffling — booking profits in BTC and pivoting toward higher-beta plays. BTC dominance has dipped 0.2% in the past week, quietly signaling this rotation. 

Chart 2: Altcoin Performance vs Bitcoin – 7-day percentage gains comparison

Source: TradingView, July 15, 2025  

Over USD 2 billion in short positions have been liquidated in just five days, marking the most brutal squeeze of the year. The derivatives bloodbath tells the real story behind crypto’s meteoric rally, with bears getting absolutely steamrolled as prices defied every pessimistic bet. 

This isn’t just another liquidation event — it’s the highest five-day short squeeze we’ve witnessed in 2025, turning the derivatives market into a feeding frenzy. As crypto prices surged to new highs, overleveraged short positions became sitting ducks, triggering cascading liquidations that only added rocket fuel to the already parabolic move. 

 Chart 3: Short and Long Liquidations

Source: Coinglass, July 15, 2025

The seeds of this week’s market madness were planted in Q2 — and what a quarter it was. 

Crypto’s total market cap exploded by 22.1%, rocketing to a staggering $3.26 trillion and obliterating the doom-and-gloom narrative that dominated Q1. This wasn’t just a recovery — it was a complete market metamorphosis that laid the groundwork for the euphoric rally we’re living through right now. 

Chart 4: Total Crypto Market Cap

Source: TradingView, July 15, 2025

Bitcoin’s Q2 Breakout 

Bitcoin exploded 30.7% in Q2, surging to a jaw-dropping $112,000 all-time high in May before settling around $107,000 by quarter’s end. But the real story? Market dominance surged from 62.29% to 65.34% — the highest since early 2021. 

This wasn’t just another rally — it was Bitcoin establishing itself as the ultimate institutional safe haven. With geopolitical tensions flaring and the DXY crashing, investors flooded into refuge assets like gold and Bitcoin. The OG crypto didn’t just participate in the flight to safety — it dominated it, proving that when uncertainty strikes, there’s only one digital asset institutions truly trust. 

Ethereum’s Impressive Comeback 

But Bitcoin wasn’t the only hero of Q2. Ethereum delivered an impressive 36.1% return, outperforming Bitcoin for the first time since late 2022 and marking its strongest quarter since 2020. This came after a brutal 45.41% decline in Q1, making the comeback even more spectacular. 

The ETH/BTC ratio exploded over 30% – its strongest relative performance in more than a year — signaling that capital wasn’t fleeing Bitcoin but expanding across Layer 1 assets. This cross-pollination effect is now turbocharging the current altcoin supercycle we’re living through. 

Chart 5: ETH/BTC Ratio

Source: TradingView, July 15, 2025

Bitcoin ETF Dominance 

The standout driver of Q2 performance was institutional adoption, particularly through US spot Bitcoin ETFs. These products recorded USD 12.42 bn in net inflows, equivalent to roughly 120,000 BTC. BlackRock’s iShares Bitcoin Trust (IBIT) continued to dominate, with total inflows reaching USD 15.6 bn and assets under management surpassing even its flagship S&P 500 ETF along with the annualized fee revenue. 

By the end of the quarter, US spot Bitcoin ETF AUM stood at USD 130 bn, with BlackRock alone commanding a 55.8% market share. This institutional infrastructure provided the foundation for sustained institutional interest that continues to drive today’s market dynamics. 

Corporate Treasury Adoption 

The corporate treasury narrative also strengthened, as public and private companies added a combined 125,000 BTC to their balance sheets in Q2, reinforcing Bitcoin’s appeal as a macro hedge. This trend has accelerated into the current quarter, with companies like Metaplanet continuing their accumulation strategies. 

Ethereum ETF Emergence 

Ethereum’s outperformance in Q2 was supported by the successful rollout of the Pectra upgrade in May, which improved transaction efficiency and user experience. Spot Ethereum ETFs began to gain traction, particularly in June, when they attracted USD 1.13 bn in inflows. By quarter-end, total AUM in US spot Ethereum ETFs reached USD 10.6 bn, with Grayscale Ethereum Trust ETF (ETHE) leading at USD 4.75 bn.

Regulatory Tailwinds Strengthen 

US political developments provided further tailwinds that continue to support current market sentiment. The Trump administration reaffirmed its pro-Bitcoin position with a series of executive orders, including the establishment of a Strategic Bitcoin Reserve. A new Digital Asset Working Group began shaping a unified federal regulatory framework, while Vice President JD Vance’s speech at Bitcoin 2025 highlighted plans to advance stablecoin legislation under the GENIUS Act. These policy actions offered rare regulatory clarity and encouraged further capital allocation into crypto assets. 

DeFi Recovery 

While there were hopes for a broader altcoin rally, the market continued to favour large-cap assets, with Bitcoin and Ethereum absorbing most institutional flows. Layer 1 ecosystem tokens saw modest gains, supported by network upgrades and speculations around future ETF approvals. The decentralised finance (DeFi) sector began to recover, with total value locked surpassing USD 119 bn. Major protocols experienced renewed capital inflows, indicating a slow but steady return of user confidence.

Looking ahead to Q3 2025, the institutional bid for Bitcoin remains a central pillar of support, though its pace may be moderate due to absent new catalysts. Regulatory clarity from the Trump administration’s Digital Asset Working Group and stablecoin legislation under the GENIUS Act could set the stage for further expansion of crypto market infrastructure. 

Ethereum’s technical progress and ETF adoption will be key areas to watch, especially as discussions emerge around spot ETF approvals for additional crypto assets. While macroeconomic uncertainty remains, particularly with respect to Fed policy and global trade dynamics, the crypto market enters Q3 with strong structural positioning, improved credibility, and rising integration into traditional financial systems. 

The current surge past USD 123,000 represents not just a new price milestone, but validation of the structural changes that began in Q2 2025. As “Crypto Week” unfolds in Washington, the market positioning suggests continued institutional interest, though the pace of altcoin outperformance indicates a more nuanced investment landscape where risk appetite is returning across the broader digital asset ecosystem.

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