Macro Update

Bitcoin briefly topped $120K before reversing on geopolitical headlines. After pushing into resistance, BTC lost momentum as Trump cut the Russia–Ukraine ceasefire window from 50 to 10 days, threatened secondary sanctions on China, and deployed nuclear submarines closer to the Russian mainland. While these headlines added to market jitters, the sell-off appeared more correlated with a broader reversal in risk assets, tech stocks gave back post-earnings gains, equity indices rolled over after gap-ups, and crypto followed suit, suggesting macro positioning and profit-taking were the primary drivers rather than geopolitics alone.

On the macro side, markets were rocked by a weaker-than-expected U.S. payrolls report, which included sharp downward revisions to prior months and ultimately led to the firing of BLS commissioner Erika McEntarfer. 

The data surprise triggered a spike in volatility across asset classes, prompting a flight to safety as investors rotated into bonds. While the Fed held rates steady for a fifth consecutive meeting, the combination of soft data and political drama added to risk-off sentiment, reinforcing fears of a policy misstep or economic slowdown.

Back in crypto, ETH outperformed slightly, reclaiming $3,900 before pulling back. Dominance slipped as flows rotated into size, but ongoing institutional demand and treasury accumulation helped support ETH on a relative basis.

ETF flows broke down. Crypto investment products saw $223M in net outflows, ending a 15-week inflow streak. BTC products led with $404M in redemptions, while ETH saw $133M in inflows, offsetting net outflows and highlighting a growing divergence in sentiment.

Index performance confirmed the market-wide de-risking. The GMCI-30 fell 8.2%, led by sharp declines in Small Caps (-16.1%), Meme (-18.3%), AI (-18.1%), and Utilities (-17.1%). Losses were broad-based across verticals, with Layer 2 (-14.2%), DePIN (-16.0%), Gaming (-15.8%), and Mid Caps (-16.0%) all underperforming. Even majors weren’t spared , Layer 1s dropped 10.7%, while GMCI USA Select fell 12.2%, reinforcing the flight to size and defensiveness in positioning.

Derivatives showed clear signs of positioning unwind. BTC’s 3-month annualized basis fell from 9.0% to 6.2%, and ETH’s dropped from 8.1% to 5.5%, reflecting a meaningful reduction in long exposure across venues. Spot-referenced basis rates also declined, landing at 6.26% for BTC and 4.66% for ETH. While both curves remain in contango, indicating some structural demand, soft implied vols suggest that near-term macro risk is still being underpriced by the options market.

Our take:

"Macro headlines are back”

So far this summer, the market has been fairly resilient in absorbing macro headlines, with most U.S. geopolitical developments largely dismissed as noise. However, when combined with a hawkish Fed and a weak payrolls print, the return of geopolitical tension was finally enough to trigger a proper shakeout.

While there were also some crypto-specific negative headlines, around Coinbase’s rather disappointing 2Q25 earnings and concerns about Strategy’s buying capacity, it’s clear that macro remains the dominant driver. With most of the earnings season now behind us and major crypto-related developments largely priced in, it's reasonable to expect macro to continue steering market direction for now.

As we head toward the September FOMC, the focus will likely stay on incoming data and rate expectations.

Notable Headlines

• Stablecoins saw further TradFi adoption

Visa expanded settlement support to PYUSD, USDG, and EURC across five chains, while PayPal enabled global crypto payments. Tether posted $4.9B in profit and $127B in U.S. Treasuries..

• The White House released its 163-page U.S. crypto policy report.
  • The was little new about what’s said in the report and mainly went over existing policy work in the making, which the market was already well aware of. Additional colour on a U.S. BTC reserve was given.

• The SEC announced “Project Crypto”, 
  •  A plan to modernize securities laws by bringing markets on-chain, with simpler rules and clear protections for ICOs, airdrops, and network rewards, so the U.S. can take part without legal confusion.

• Tokenized equities continue to gather momentum
  • With total tokenized AuM nearing $25B, eToro launching tokenized stock trading on Ethereum, and Coinbase expanding access to tokenized stocks and prediction markets for U.S. users.
• Corporate treasury adoption continues
  • Strategy filed a $4.2B raise to buy more BTC and has already acquired 21,021 BTC YTD (25% return), now holding 628,791 BTC, while SharpLink boosted its ETH stack to $1.6B after a fresh $100M purchase.

Below, we take a closer look at the first headline on stablecoin developments and introduce an underexplored metric, velocity, by examining both stable outstanding supply and transfer volume.

Stablecoin Velocity

Stablecoins continued to make headlines this week, reflecting growing adoption not just among crypto-native users but increasingly across the traditional financial system, this time driven by major payment giants like PayPal and Visa.

• PayPal Enables Global Crypto Payments: PayPal now allows merchants to accept payments in over 100 cryptocurrencies, converting them instantly to stablecoins or fiat. In doing so it slashes international transaction fees by up to 90% and pushes crypto payments further into the mainstream.
• Visa Expands Stablecoin Settlement: Visa has broadened its on-chain settlement network by adding support for PYUSD, USDG, and EURC, while integrating the Stellar and Avalanche blockchains alongside Ethereum and Solana.

On top of that, Tether posted its Q2 2025 results, generating $4.9 billion in profit and disclosing $127 billion in the U.S. Treasury exposure, surpassing South Korea, becoming the 18th largest holder of U.S. Treasuries.

Our take:

“TradFi’s embracing stablecoins as the medium of exchange of the digital economy”

This week’s developments aren’t isolated,  they’re part of a broader structural shift that continues to unfold. With payment giants like PayPal and Visa now actively integrating stablecoins into their global infrastructure, we’re seeing a clear validation of stablecoins as the first real bridge between traditional finance and blockchain-based systems.

We view this as a natural progression. As regulatory clarity begins to emerge in the U.S. and distributed ledger technology (e.g. blockchains) becomes more embedded in financial infrastructure, stablecoins are positioned to become the primary medium of exchange in the digital economy, not just within crypto-native circles, but increasingly across mainstream financial rails.

As adoption accelerates and institutions step in, it's important to understand the stablecoin ecosystem beneath the surface. 

One overlooked metric is stablecoin velocity: the rate at which stablecoins circulate relative to supply, offering insight into real economic usage versus passive holding.

Total Outstanding Supply

Many who have been looking at stablecoins, even at the surface level, should be familiar with the chart below. It shows the total outstanding supply of stablecoins over time. The below breaks down across the largest issuers.Last week, the total supply surpassed $250 billion, a milestone that reflects the growing demand for stablecoins as foundational settlement assets across both crypto-native and traditional financial systems.

The chart highlights the dominance of Tether and Circle as the two leading stablecoin issuers, with newer entrants captured under “Others.” As of today, Tether accounts for approximately $160 billion in outstanding supply, while Circle represents around $60 billion.

Transfer Volume

Another, less frequently examined metric is weekly transfer volume, a measure of how actively stablecoins are being used for transactions rather than just held. It captures the total value moved onchain and serves as a proxy for real demand, since each transfer involves paying a fee.

The chart above shows that Circle currently accounts for around 50% of all stablecoin transfer volume, with total weekly volume approaching $1 trillion. What stands out is the reversal in rankings: while Tether leads in outstanding supply, Circle leads in actual usage. 

This disconnect is where the velocity metric becomes insightful,  helping us understand which stablecoins are being transacted most actively relative to their supply.

Velocity

Bringing both metrics together, stablecoin velocity offers a clearer view of how efficiently stablecoins are used within the ecosystem. It is calculated as:

Velocity = Weekly Transfer Volume / Total Outstanding Supply

This metric reveals the rate at which stablecoins circulate relative to their supply, helping distinguish between tokens primarily used for transacting and those that are largely idle. By isolating usage intensity, velocity adds an important dimension to understanding real demand beyond issuance figures alone.

The above shows meaningful differences in how actively each stablecoin is used. Circle leads with a velocity above 8, indicating strong transactional activity relative to supply. Sky also shows high usage at 5.5, suggesting it's being moved frequently onchain. 

In contrast, Tether, Ethena, and PayPal fall in the 1.5–2 range, pointing to more moderate use. First Digital, with a velocity below 1, appears to be largely held rather than transacted. That said, this metric skews toward on-chain activity, stablecoins like USDT and FDUSD, which are primarily used on centralized exchanges, won’t have their full transactional volume reflected here, potentially understating real usage.

As stablecoins move toward mainstream adoption and become embedded in global payment and settlement systems, it’s not just how much is issued that matters, it’s how much is used. High velocity signals genuine transactional demand and integration into day-to-day financial flows, while low velocity may indicate speculative holding or dormant capital. Soon we’ll see stablecoins power everything from remittances to onchain commerce, tracking velocity is essential to understanding which assets are actually driving utility,  and which are just along for the ride.