Bitcoin falls 14% in Q2; stablecoin supply contracts

A CEX.IO report found that Bitcoin fell 14% in the second quarter, trading below $60,000 and reaching its lowest level since 2024. Total stablecoin supply contracted to $312 billion, down more than $3 billion from the prior quarter. The broader crypto market lost about 6.2% of value over the same period.

The report noted stablecoins accounted for 14% of total crypto market capitalization, up from 13% a quarter earlier. It described stablecoins as the market’s cash layer used to move funds between exchanges, settle trades and access decentralized finance. The decline in supply reflected weaker trading and transfer activity during the quarter.

Yield-bearing stablecoins recorded the largest fall. After rising for nearly three years, that segment shrank by more than $3.5 billion, a drop of roughly 15% from the first quarter. Athena’s sUSDe lost about 52% of its market value, erasing nearly $2 billion, while Sky’s sUSDS fell about 16%. By contrast, tokens backed by real-world assets or short-term U.S. government debt gained: a tokenized fund from a large asset manager rose about 2%, while treasury-backed alternatives such as USYC and USDY increased about 16% and 66%, respectively.

Stablecoin balances shifted across blockchain networks. Ethereum layer-2 networks saw a 24% decline in stablecoin holdings, down $4.34 billion, with Arbitrum accounting for most of that drop at roughly $3.5 billion, a 45% fall. HyperEVM reported a 300% increase to $5.6 billion. Ethereum’s base layer recorded an outflow of more than $10 billion in the quarter. Tron added about $3.4 billion in stablecoins and BNB Chain gained roughly $700 million, trends the report linked mainly to payment and settlement activity on those chains.

Trading activity cooled. Total stablecoin trading volume fell about 18% to $6.8 trillion in Q2. Tether (USDT) volume declined about 24%, while USD Coin (USDC) trading volume rose roughly 34%, making USDC the only major stablecoin to post absolute growth. USDC’s share of total crypto trading volume reached a record 12.5%. CEX.IO’s platform data showed USDC accounted for about 60% of stablecoin-related operations on its exchange in Q2, up from 58% the prior quarter.

Transaction counts dropped to 4.48 billion in Q2, down 530 million from the previous quarter, the largest absolute quarterly decline on record. After excluding bot and non-economic activity, adjusted transaction counts fell to about 613 million, down roughly 11 million from Q1. Adjusted stablecoin transfer volume slipped about 5.5% to $4.09 trillion. Transfers below $250 rose about 5% to $19.39 billion, indicating smaller retail-sized movements were more resilient than larger transactions.

Regulatory developments and institutional projects intersected with market changes. The European Union’s Markets in Crypto-Assets transition period ended July 1, requiring crypto-asset service providers to seek authorization or stop serving EU clients; some venues reduced USDT support and favored compliant alternatives such as USDC. In the United States, proposed bills aim to clarify reserve and oversight rules for stablecoin issuers. Several financial firms and payment companies announced stablecoin initiatives, and Japan’s largest banks have been developing a yen-pegged token.

The report noted that during the 2022–2023 downturn stablecoin supply took about a year to return to sustained growth. It added that the current cycle could differ because liquidity is shifting between payment-focused chains, decentralized finance yield products and regulated treasury-backed offerings.