It was the best of times for blockchain, and the worst of times for much of crypto. The first half of 2026 exposed a growing divide between the technology's adoption by Wall Street and the performance of digital assets themselves.
Crypto Shed $1tn in H1 Even as Wall Street Builds on Blockchain
1 July 2026 - 01:15 CEST
By Jona Jaupi
The cryptocurrency market lost more than $1tn during the first half of 2026 as Bitcoin (BTC), Ether (ETH) and other digital assets fell sharply, even as traditional financial firms continued pushing into the technology that makes crypto possible.
The total cryptocurrency market capitalization fell from $3.18tn at the beginning of January to $2.11tn by the end of June. Bitcoin declined over 34% during the period to trade at around $58,700 at 22:05UTC on 30 Jun, while Ether (ETH) lost 47.6% to trade near $1,575.
The first six months of the year were defined by two contrasting trends: on one hand, macroeconomic uncertainty and weaker investor sentiment pummelled the prices of most cryptocurrencies. On the other, blockchain technology became super hot as Wall Street further embraced tokenized funds, stablecoins and other digital asset products.
The contrast underscores a widening divide between the blockchain technology increasingly embraced by traditional financial firms and the cryptocurrencies themselves, which endured one of their weakest starts to a year in recent market cycles. Even the few tokens that posted strong gains during the first half were closely tied to traditional finance.
Bitcoin and Ether retreat
Bitcoin entered 2026 after reaching a record high of about $126,000 in October 2025. That rally did not last after markets came under pressure following President Donald Trump announcing new tariffs on China late 2025.
Market conditions grew even worse in early 2026 when the president at the end of February announced a war on Iran. Inflation, in part spurred on by the resultant boost in oil prices, has also remained above the Federal Reserve's target, which has only added to investor caution.
Bitcoin briefly climbed back above $80,000 in April before falling below $60,000 by the end of June. Ether posted even steeper losses as activity across decentralized finance (DeFi) remained below previous cycle highs.
ETF demand cools
Spot Bitcoin ETFs also lost momentum. According to SoSoValue data, the funds recorded net outflows in four of the first six months of the year.
January saw around $1.61bn leave the funds, followed by another $206m in February. Investors returned in March and April, adding a combined $3.3bn. However, the recovery was short-lived.
The funds lost $2.43bn in May and another $4.29bn in June. Those two months accounted for more than $6.7bn in withdrawals and marked the weakest of the year, so far.
Meanwhile, Spot Ether ETFs also struggled, with the funds recording positive net flows only in April. Total assets held fell from $15.9bn at the start of January to around $8.6bn by the end of June.
DeFi remains mixed
Decentralized finance also had a difficult first half, with the total value locked (TVL) across DeFi protocols falling from $114.5bn at the start of January to $69.4bn by the end of June, according to DeFiLlama.
Security further remained a challenge as hackers stole $102m in January, $24m in February and $41m in March before losses jumped to $645m in April. Hack losses then eased to $61m in May and $75m in June.
More than two dozen exploits were recorded in April, with two attacks – on liquid restaking protocol Kelp and perpetuals exchange Drift – accounting for more than 90% of funds stolen. Both breaches were linked to North Korea's Lazarus Group.
Not every token fell
Despite the broad market decline, a handful of crypto assets posted strong gains during the first half.
Hyperliquid's HYPE token rose 166% during the first six months of the year, making it one of the best-performing major cryptocurrencies. The rally came as the decentralized perp exchange continued gaining market share and trading volume.
Morpho also outperformed the broader market, with the DeFi lending protocol's token climbing more than 73% during the first half of the year. This came as lending remained one of the stronger areas of the DeFi sector.
Institutions keep building
Institutional activity also continued to grow during the first half of the year. Companies such as BlackRock, New York Life Investment Management and Allfunds expanded their blockchain initiatives, while cryptocurrency native firms like Coinbase pushed further into tokenized stocks.
Stablecoins also gained momentum as more firms explored their use for payments and settlement. The sector's total market value rose from $307bn at the start of January to more than $312bn by the end of June, according to DeFiLlama.
Moreover, in one of the biggest announcements of the year so far, more than 140 companies, including Visa, Mastercard, Stripe, BlackRock, BNY, Coinbase and Google backed a new US dollar-backed stablecoin called Open USD.
At the same time, the US Senate Banking Committee advanced the CLARITY Act out of committee in May 2026. Though it remains to be seen whether the bill gets passed into law by the end of 2026.
