Crypto Quarterly Review

Bitcoin had a disastrous start to the year and an equally weak second quarter, during which the rally toward $81,000 completely faded. As a result, the cryptocurrency plunged to its lowest levels of 2026, while spot demand remains subdued, profit-taking continues to dominate, and derivatives positioning points to persistent caution among investors. Key developments

• In June, Bitcoin fell below $60,000 for the first time since 2024. The main drag has been persistent outflows from U.S. spot Bitcoin ETFs, which totaled an estimated $4.5–6 billion during the final weeks of the first half of the year.
• The weakness began early. In January, Bitcoin and Ethereum ETFs recorded nearly $1 billion in outflows in a single day , setting a negative tone for the year. Despite a strong rebound in March, when ETFs attracted $1.32 billion of inflows, spot Bitcoin ETFs still finished the first quarter with roughly $500 million in net outflows .
• Selling pressure intensified again in May and June. A six-day streak of more than $1.5 billion in ETF outflows reduced net inflows for 2026 to just around $536 million . At the same time, the ETF market became increasingly concentrated around BlackRock and Fidelity , which had previously attracted most of the inflows but also turned into net sellers in recent weeks.
• In June, Strategy sold a small portion of its Bitcoin holdings for the first time since 2022, weighing on sentiment surrounding the world’s largest corporate Bitcoin holder.
• The decline in Bitcoin prices also hit the mining industry. For some miners, production costs exceeded the market price of Bitcoin , while the network’s hashrate fell by around 5.8% at the beginning of 2026, highlighting mounting pressure across the mining sector.
• The narrative of Bitcoin as a hedge against U.S. dollar weakness lost momentum as markets priced in a more hawkish Federal Reserve, higher interest rates, and a rotation of capital away from cryptocurrencies toward AI and semiconductor stocks, as well as the highly anticipated SpaceX IPO .
• On the regulatory front, investors are still waiting for a breakthrough. Progress on the Clarity Act in the United States remains slow, limiting institutional appetite despite continued expansion of cryptocurrency services by major financial firms.

Bitcoin chart (D1 timeframe)

Source: xStation5

Source: XTB Research, Bloomberg Finance L.P.

• Ethereum significantly underperformed Bitcoin during the first half of 2026, as investors favored Bitcoin ETFs while demand for ETH remained considerably weaker.
• Spot Ethereum ETFs continued to attract only modest institutional interest , with inflows remaining well below those seen in Bitcoin products despite periods of improving market sentiment.
• Ethereum staking reached another record high , with more than one-third of the total ETH supply locked in staking, reducing the amount of freely circulating coins.
• Layer-2 networks continued gaining traction , processing an increasing share of Ethereum transactions and helping lower fees on the main network.
• Decentralized finance (DeFi) activity remained resilient , although total value locked (TVL) stayed below previous cycle highs as investors remained cautious.
• Stablecoin usage on Ethereum continued to expand , reinforcing the network’s position as the leading settlement layer for tokenized dollar transactions.
• Ethereum developers continued work on the Pectra upgrade , one of the network’s most important upcoming protocol improvements, aimed at enhancing scalability, validator efficiency, and user experience.
• Despite improving on-chain fundamentals, ETH remained under pressure as higher U.S. interest rates and strong performance of AI-related equities continued to divert capital away from the broader cryptocurrency market.

Ethereum charts (D1 timeframe)

Source: xStation5

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