#夏日创作营 After three consecutive quarters of decline, can the crypto market find a stabilization window in Q3?

The crypto market has just gone through its worst quarter since 2022. Based on the price action from July to date, let’s sort out the various dilemmas that urgently need to be turned around in Q3.

If the market continues to fall for three straight quarters, this cannot simply be defined as a round of adjustment.
The overall market cap of cryptocurrencies shrank by $304.8 billion, a drop of 12.6%, falling to $2.1 trillion. Compared with the all-time peak of $4.27 trillion set in October 2025, the current market cap has crashed by more than 52%, sliding to its lowest point since September 2024.
Average daily trading volume is $93.1 billion, down 20.9% year over year.
Top regulated exchanges data shows: perpetual contract trading volume fell 10%, to $1.27 trillion in notional; spot trading volume dropped 27.9%, with only $21k.
Stablecoins were the most stable growth segment in the industry since 2023, but now they’ve seen a contraction in size for the first time in more than three years: market cap fell 1.6% to $305.1 billion.
All key indicators point to the same conclusion: capital is leaving the crypto market, not being reallocated within the industry.
Compared with the magnitude of total losses, the structural shock taking place inside the market is more worth attention.
At the end of June, Bitcoin’s price fell to around $58,500, hitting the lowest level since 2024, with a quarterly decline of 14.2%. Ethereum’s situation was even more severe: it plunged 25.4% in the quarter, with the low around $1,625.
Many experts have formed a unified view: in Q2, Bitcoin and US equities weakened in tandem. This was not passive tracking of the stock market; in terms of performance, it even replaced risk stocks. Meanwhile, during the S&P 500 rebound phase, Bitcoin and related risk assets continued to underperform the broader market.
The cross-asset linkage logic that prevailed from 2024 to 2025 has already broken down. At that time, Bitcoin was viewed as a risk-on asset, with its price highly synchronized with the Nasdaq index.
The situation today is completely different: driven by multiple factors including continued spot ETF redemptions, tighter policy from the Federal Reserve, and large-scale Bitcoin sell-offs by corporate treasury institutions Strategy, the entire crypto industry has entered an active deleveraging process. Strategy’s earlier strategy of accumulating coins had been an important force supporting market upside expectations in 2024. ETF fund flows have reversed completely: US spot Bitcoin ETFs attracted $2.02 billion in inflows in April, but in the subsequent months they faced large-scale redemptions, and Q2 ultimately recorded net outflows of about $4.67 billion.
In June, the outflow nearly reached $4.5 billion, the worst monthly performance in this asset class’s history.
This is not a secondary signal that can be ignored. ETF subscriptions and redemptions map directly to real buying and selling in the market, not simply to market sentiment. Continuous redemptions mean Bitcoin spot is continuously flowing to exchanges for sale.
The market is adjusting an important bearish expectation: Citigroup, once one of the Wall Street institutions most optimistic about crypto assets in 2025, announced on July 1 that it lowered its 12-month target price for Bitcoin from $112,000 to $82,000.
However, some early signals suggest this current capital outflow cycle may be nearing its end.
Santiment data shows that since May 6, cumulative ETF outflows have already exceeded $8.5 billion. Historical patterns indicate that capital withdrawals of this scale often correspond to the low-price selling phase rather than the start of a new round of major downside.
Glassnode data shows: even as institutional capital continues to leave, Bitcoin long-term holders started accumulating again in early July.
When the market approaches the bottom of the cycle, the operational divergence between retail and institutions is often more pronounced than in the middle of a crash.
In early July, ETF capital briefly reversed, recording a net inflow of $46.6 million, delivering a phase of positive signaling. Then, driven by BlackRock’s IBIT fund, it attracted $510 million in just three days. But this rebound is hard to sustain: funds turned back to outflows, and on July 8 the single-day net outflow was about $85 million.
In the first three weeks of July, Bitcoin traded in a range of $56,000–$64,000, repeatedly testing the $63,700–$64,000 resistance zone but being pressured and pulled back each time.
Now all eyes in the market are focused almost entirely on the Federal Reserve. Market attention has become highly single-dimensional. The June Federal Open Market Committee (FOMC) meeting kept interest rates at 3.5%–3.75%, the first policy meeting chaired by Kevin Wa​​sch.
The benchmark rate has remained unchanged since December 2025. Even so, multiple Fed officials have signaled that there may be rate hikes within the year. Wa​​sch himself did not provide a clear policy outlook. This stance is far more hawkish than the market expected, and it also explains why an interest-rate-like, non-yielding asset such as Bitcoin has difficulty sustaining an upward trend.
At present, nearly all trading desks treat the FOMC meeting on July 28–29 as the most important event in Q3.
Two scenario projections:
If the Fed releases relatively dovish signals, Bitcoin could hold in the $68,000–$84,000 range, and ETF money flowing back would have a basis;
If the policy stance is more hawkish, then $50,000–$56,000 will become Bitcoin’s new consolidation center.
Besides that, corporate Bitcoin reserves create a tail risk unique to this cycle.
The asset sell-off in June was initially marketed as a niche operation intended to capture dividends.
Over the past two years, the crypto industry has accumulated stable institutional capital support. But if other corporate treasury entities are influenced by balance-sheet pressure and follow suit by selling Bitcoin, the entire industry may lose institutional capital support.
Regulatory push: where things stalled and where progress was made
In 2025 through early 2026, the whole industry has been actively promoting the《CLARITY Act》legislation.
The bill aims to define regulatory boundaries: the US Commodity Futures Trading Commission (CFTC) would regulate digital-asset commodities, while the US Securities and Exchange Commission (SEC) would regulate digital-asset securities.
The House passed the bill in July 2025 with 294 votes in favor and 134 against; in May 2026, the bill passed in the Senate Banking Committee 15:9. But after that, the legislative process stalled.
The bill originally set July 4 as an informal review deadline. When it failed to advance on schedule, market expectations deteriorated sharply: in February, the market estimated the probability of the bill being enacted within 2026 at about 82%; by mid-July, it fell to 40%–45%. The Senate originally planned to discuss the bill on June 1, but it ultimately did not occur as scheduled.
There are still multiple unresolved issues: President Trump’s crypto-asset holdings and related disclosure obligations, the bill’s Section 604 protection provisions for developers, and rules related to stablecoin yield.
To reach the 60-vote threshold needed to end a long debate in a Senate vote, it would require securing support from seven Democratic lawmakers—yet currently only two Democrats have publicly stated support for the bill.
Stifel and Beacon Policy Advisors analysts warned: if there is still no progress in July, the substantive advancement timeline for the bill may be pushed to 2027. By then, the Senate will be in recess and US midterm elections will gradually be approaching.
The ambiguity in current regulatory rules continues to affect the price trajectory of crypto assets.
When allocating capital, investors increasingly place more weight on the risks caused by long-term unclear regulatory jurisdiction. This lifts the risk premium across all crypto products, even the most conservatively designed projects can’t avoid it.
This uncertainty keeps affecting core stages such as token issuance, asset custody, and exchange registration.
As a result, this quarter’s industry capital is no longer broadly dispersed; capital is concentrating toward a small number of companies that can steadily generate profits. There are few bright spots, but most growth tracks within the market have shrunk. Only two segments have expanded against the trend. This phenomenon reflects that real market demand is changing.
The prediction market is set to explode: nominal trading volume rose 48.7% year over year, reaching $113.8 billion. June became a watershed for the industry. Single-month transaction size nearly approached $50 billion to $53 billion, setting a monthly high.
Kalshi holds a 58.9% market share. Over the past year, about 80%–87% of Kalshi’s trading volume has come from sports derivatives contracts.
The track is growing fast with a clear target customer base, but it is highly constrained by legal and policy rules.
On June 10, the US Commodity Futures Trading Commission released a new rule proposal, opening a 45-day public comment period.
The regulatory approach is: keep the vast majority of sports trading markets operating normally, while prohibiting derivatives contracts tied to player injuries, referee rulings, and certain real-time events at specific venues.
Meanwhile, multiple states are locked in complex legal disputes involving prediction markets; Arizona has already officially filed a lawsuit. Legal disagreements may ultimately end up being submitted for a ruling by the US Supreme Court.
Backed by mature institutional partnership ecosystems, the track keeps expanding: Polymarket has partnered with Dow Jones, and Kalshi has teamed up with Nasdaq. However, lawsuits at the state level are still ongoing, and a complete legal framework has yet to be finalized.
Tokenized collectibles performed strongly in Q2: trading volume surged about 143% quarter over quarter, reaching $1.4 billion. Among them, Collector Crypt saw particularly striking growth: in June, trading volume jumped 317% to $406 million, more than 12 times the同期 OpenSea NFT trading volume.
Even in a downcycle, real-world asset tokenization (RWA) continues to develop steadily. Tokenized assets issued by 177 issuing entities have an on-chain total value of about $28.1 billion.
The growth momentum of this track comes from the fundamentals of income-generating underlying collateral assets, largely independent of the ups and downs of crypto market risk cycles. This development characteristic is very similar to the trend of building institutional ecosystems in prediction markets. Despite Wa​​sch not wanting to provide policy guidance and even the dot-plot releasing tightening-leaning signals, the market still treats the FOMC decision on July 28–29 as the most important event of the quarter.
It remains unclear whether the Senate will be able to pass the《CLARITY Act》before recess in August. Supporters of the bill expect a revised version to be released around July 20.
The real obstacles are very prominent: the bill still needs seven more Democratic votes to pass smoothly. Wall Street consensus has already changed—before enactment, prospects have shifted from “more likely” to “too close to call.”
Based on comprehensive indicators, the market currently lacks a basis for an extreme selloff.
Although the market’s “money-making effect” has weakened significantly—average on-chain trading fees across major mainstream sectors in June fell 44.6%—Bitcoin’s price remains closely near the 200-week moving average, and the long-term support structure has not been destroyed.
Market trading logic has changed: participants no longer rely purely on narrative-driven hype; trading decisions focus more on price action, policy choices, and interest-rate expectations. It is hard for a broad rally driven by optimistic sentiment to appear. $BTC ‌