Crypto posts third consecutive quarter of negative returns

The crypto market has once again experienced a disappointing quarter. According to a new report from Bitwise, the tally now stands at three consecutive quarters of negative returns, something not seen since 2022. At the same time, fundamental metrics are showing strong growth, creating a remarkable contrast.

Bitcoin is available at OKX and Bybit.

Bitcoin ETF outflows reach record level

The Bitwise 10 Large Cap Crypto Index fell 15.4% in Q2. Eight of the ten components ended the period in the red. Notably, spot Bitcoin ETFs recorded their largest-ever outflows in the same quarter, further reinforcing the negative sentiment surrounding the Bitcoin price.

Yet it is not all doom and gloom. The prediction market sector reached a record volume of $43.2 billion. Tokenised real world assets rose 50.3% year-over-year to a total of $32.89 billion. Meanwhile, stablecoin settlement volume now stands at 2.3 times that of Visa, an impressive milestone that shows just how widespread the adoption of digital dollars has become.

Ethereum and DeFi grow strongly despite price pressure

Comparing the current cycle with the depths of the bear market in 2022 paints a very different picture. Transaction activity on the Ethereum network is roughly 13 times higher than it was then. The total value locked in DeFi has grown by more than 60%, and assets under management in stablecoins have roughly doubled compared with 2022.

This makes the situation on the crypto market unique: underlying activity is growing steadily, but prices are not keeping pace. Bitwise notes that it is only the prices that are lagging behind. The question, therefore, is how long this gap between fundamental growth and market performance will persist before prices catch up.