Crypto market posts third consecutive quarterly loss

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Crypto market is operating at a loss

Bitcoin ETF outflows added pressure to the market

Outflows from spot Bitcoin ETFs became an additional source of selling pressure. Since their launch in the U.S., these funds have become one of the main channels of institutional demand. However, record quarterly withdrawals showed that investors began reducing exposure as market conditions weakened.

At the same time, ETF flows have repeatedly changed direction during the current cycle. By May 2026, Bitcoin funds had attracted more than $3.4 billion over seven consecutive weeks of inflows.

Stablecoins and tokenized assets continue to grow

Despite lower prices, some segments of the crypto industry continued to expand. According to Bitwise, stablecoin settlement volume was 2.3 times higher than the volume processed by Visa.

The company also noted that stablecoin issuers now hold more U.S. Treasury securities than most countries.

Adjusted stablecoin transaction volume reached $10.9 trillion in 2025, while total settlement volume under a broader methodology amounted to $33 trillion.

Visa is also continuing to expand its involvement in blockchain payments. As of March 2026, the company’s annualized stablecoin settlement volume had approached $7 billion.

At the same time, the tokenized real-world asset market grew 50.3% in the first half of 2026 to $32.89 billion. The segment includes digital versions of government bonds, private credit, and investment funds.

Prediction markets and crypto stocks proved more resilient

Prediction market trading volume reached a record $43.2 billion in the second quarter. That was almost 18 times higher than during the same period a year earlier.

Stocks of crypto-related companies also outperformed the largest digital assets. The Bitwise Crypto Innovators 30 Index rose 30.6% during the quarter, despite a double-digit decline in the large-cap crypto index.

Bitwise also reported that Hyperliquid, PancakeSwap, and Aave each generated about $900 million in revenue over the previous year. The figures point to continued demand for decentralized trading, lending, and derivatives platforms.

By May 2026, seven-day perpetual futures trading volume on Hyperliquid had exceeded $41 billion, while open interest reached approximately $9.4 billion.

Onchain indicators remain above 2022 lows

Bitwise also compared current market conditions with the lows of the previous bear cycle. Since then, activity on the Ethereum network has increased by about 13 times, while total value locked in DeFi has risen by more than 60%.

Assets held in stablecoins have also roughly doubled compared with the 2022 market low. “It’s only prices that haven’t kept pace,” Bitwise said.

The company estimates that the crypto industry is now roughly twice the size it was at the bottom of the previous cycle. However, stronger network activity and broader institutional participation do not rule out further short-term price weakness.

Why the crypto market cannot exit the bear phase

The crypto industry is struggling to emerge from the bear market because of a combination of weak demand and an unfavorable external environment. The military conflict involving Iran, instability around the Strait of Hormuz, and other geopolitical tensions are keeping uncertainty high and creating risks for oil supplies. This is reinforcing inflation concerns and reducing the likelihood of rapid monetary easing. In such conditions, investors tend to cut exposure to the most volatile assets, while Bitcoin and other cryptocurrencies still often trade as part of the broader risk market.

Another problem is that the market still lacks a convincing new catalyst capable of restoring mass investor interest. Previous cycles were supported by the launch of major blockchains, the DeFi and NFT booms, and expectations surrounding ETF approvals. Many of those narratives are now already reflected in prices. Without a new source of demand, capital remains concentrated in a small number of leading assets, while most altcoins continue to face pressure from ongoing token issuance, unlocks, and limited real-world demand.

Previously, we wrote about three trends that could drive the next phase of crypto market development.

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