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A report published by Binance Research revealed that the cryptocurrency market experienced a broad contraction in the first half of 2026, affecting on-chain activity as a whole rather than a rotation of capital among sectors.
According to the report, the total value of locked assets in the decentralized finance ecosystem decreased by $43.4 billion, or 38 percent, in the first six months of the year. The total market capitalization of the six major layer-1 blockchains also shrank by $246.5 billion, or 42 percent.
On the Ethereum side, there was also a significant shift in institutional asset allocation. The amount of $ETH held by spot Ethereum ETFs decreased to 5.2 million $ETH, while the amount of Ethereum held by digital asset treasury companies increased to 7.7 million $ETH.
User activity on Layer 2 networks also weakened significantly. User activity decreased by approximately 77 percent between January and June, while Solana network revenue fell by 64.5 percent during the same period.
$BNB Chain, however, was the only network among the major Tier 1 networks to maintain its deflationary structure. The report stated that $BNB Chain’s annualized token burn rate was 5.05 percent.
Security issues also increased pressure on the sector. A total of 207 security incidents were recorded in the cryptocurrency sector in the first half of the year, and the total loss caused by these attacks and vulnerabilities reached $972 million.
In contrast, the forecasting market was one of the few areas to show strong growth. Driven by the World Cup and non-sporting events, the forecasting market’s monthly nominal trading volume increased by 86 percent to $51.6 billion.
Binance Research stated that the data points to a contraction phase where liquidity and user activity decline across the market, rather than a classic rotation period where investors exit specific sectors and move into other areas.
*This is not investment advice.
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crypto-economy.com