Crypto Posts Third Negative Quarter As ETF Outflows Hit Record

Crypto posted a third consecutive quarter of negative returns in Q2, the market’s longest losing streak since 2022, as large-cap tokens fell and spot bitcoin ETFs recorded their worst quarter of outflows on record.

The Bitwise 10 Large Cap Crypto Index fell 15.4% in Q2, with eight of its 10 constituents ending the quarter lower. Onchain activity, trading volume and DeFi assets also slipped, while crypto’s correlation with stocks rose during a weaker period for risk assets.

The drawdown came as investor capital moved more aggressively into other high-beta trades. U.S. semiconductor funds pulled in about $7.1 billion in one day as buyers returned to AI chip exposure, led by a record $5.43 billion allocation into BlackRock’s iShares Semiconductor ETF.

That rotation left crypto in a tougher position. Bitcoin and Ethereum products entered the quarter with weaker flow support, while altcoins faced thinner liquidity and lower conviction after several failed attempts to recover broader market momentum.

Prediction Markets And RWAs Buck The Slide

The weakness in token prices did not stop growth in several onchain categories. Prediction market volume hit a record $43.2 billion in Q2, almost 18 times higher than a year earlier, extending one of the strongest product trends in crypto.

The category has moved beyond election-only trading into sports, politics, company events and macro contracts. A recent record $10.8 billion prediction-market week showed how quickly volume can concentrate when major public events and viral markets line up.

Tokenized real-world assets also expanded through the price decline. RWA assets climbed 50.3% year to date to $32.89 billion, helped by tokenized Treasuries, private credit products, onchain funds and equity-linked markets.

Solana remained one of the more active public chains for tokenized equity trading, with tokenized stock activity recently hitting record tokenized equity volume as xStocks, Backpack-linked products and SpaceX-related instruments pushed public-market exposure deeper onchain.

Stablecoins Keep Scaling Through Weak Prices

Stablecoins remained the strongest usage layer in the market. Stablecoin settlement volume reached 2.3 times Visa’s volume, while stablecoin assets under management roughly doubled from the 2022 bear-market bottom.

Payment firms and card networks have continued building around digital-dollar rails during the price drawdown. Visa added more blockchain support for stablecoin settlement, while card issuers and fintech platforms kept pushing crypto-funded spending products into standard payment flows.

Crypto equities also held up better than large-cap tokens. The Bitwise Crypto Innovators 30 Index rose 30.6% in Q2, showing stronger public-market demand for exchanges, miners, custody firms, brokers and infrastructure companies than for the largest crypto assets themselves.

Ethereum transaction activity is about 13 times higher than at the 2022 bottom, DeFi TVL is up more than 60%, and stablecoin AUM has roughly doubled.

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