Institutional Bet on Ethereum, Fed Easing Spark Crypto Supercycle Potential

The Federal Reserve’s potential policy shifts and the next chair’s leadership could catalyze a crypto "supercycle," according to Mike Novogratz, CEO of Galaxy Digital. This forecast hinges on the interplay between macroeconomic easing, institutional adoption, and Ethereum’s (ETH) growing dominance over Bitcoin (BTC) in the current bull market. In a September 2025 analysis, Galaxy highlighted that August 2025 saw renewed institutional interest in crypto, driven by Ethereum’s outperformance and structural developments like corporate blockchain initiatives and sovereign digital asset allocationsSeptember 2025 Crypto & Macro Commentary^[1].

Macro volatility and Fed expectations dominated August, with mixed inflation signals and soft labor data pushing markets toward dovish bets. The Fed’s Jackson Hole symposium reinforced this narrative, with Chair Jerome Powell signaling a “shifting balance of risks” tied to rising unemployment. Equity markets responded positively, while gold and Bitcoin, as traditional store-of-value assets, saw renewed demand. However, Ethereum surged to a four-year high of $4,953, outpacing BTC and marking a pivotal shift in investor sentimentSeptember 2025 Crypto & Macro Commentary^[1].

Ethereum’s strength was amplified by robust inflows into spot ETFs and accumulation by digital asset treasury companies (DATCOs). U.S. ETH ETFs attracted $4 billion in August, their second-highest monthly inflow after July, while BTC ETFs faced net outflows. DATCOs, particularly those focused on ETH, injected significant capital, with a $1 billion allocation to ETH capable of materially altering market dynamics due to its smaller market cap compared to BTC. Novogratz attributed Ethereum’s momentum to institutional positioning, noting that firms like Bitmine increased ETH holdings from 625,000 to over 2 million by month-endSeptember 2025 Crypto & Macro Commentary^[1].

Corporate blockchain adoption further underscored the crypto sector’s institutionalization. Companies such as Circle, Stripe, and Google launched Ethereum Virtual Machine (EVM)-compatible layer-1 (L1) networks, aiming to capture value through proprietary infrastructure. These moves, while criticized for prioritizing control over decentralization, signaled a broader trend of integrating blockchain into core financial systems. Meanwhile, U.S. Secretary of Commerce Howard Lutnick announced plans to publish GDP data on public blockchains via oracle networks, reflecting growing governmental acceptance of decentralized infrastructureSeptember 2025 Crypto & Macro Commentary^[1].

The interplay between macroeconomic easing and institutional flows remains critical. As Fed rate-cut expectations rose, Bitcoin’s correlation with gold strengthened, reinforcing its role as a hedge. However, Ethereum and altcoins remained more sensitive to shifts in risk appetite, with the Bloomberg Galaxy Crypto Index (BGCI) reflecting broad altcoin rallies. Galaxy emphasized that structural demand from DATCOs and corporate treasuries, combined with ongoing regulatory clarity, could sustain crypto’s momentum into the fallSeptember 2025 Crypto & Macro Commentary^[1].

Key events in September 2025, including the Fed’s FOMC decision and inflation data releases, will test the durability of the current rally. If the Fed follows through on aggressive rate cuts, Novogratz argues the crypto market could enter a supercycle akin to the 2020–2021 bull run. However, long-term risks such as sticky inflation and fiscal pressures remain, potentially tempering gains. For now, the market’s focus remains on the next Fed Chair, whose policies could determine the trajectory of digital assets in the coming yearsSeptember 2025 Crypto & Macro Commentary^[1].