Data & Insights: Stablecoin Summer; Bitcoin Boom

Stablecoin VC Renaissance

• The stablecoin and payments category has demonstrated a remarkable rebound in venture capital activity, with Q3 and Q4 2024 recording 43 and 42 deals, respectively - figures that represent new all-time highs for quarterly deal counts in this sector.
  • This surge becomes particularly impressive when viewed against the 2021 cycle peak, where the entire year saw 87 total deals across all four quarters.
  • In the first quarter of 2025, we observed that 7.5% of all VC deals were invested in a payment provider or stablecoin issuer. 
  • The stablecoin and payments category, which encompasses companies working on stablecoin issuance and payment processing infrastructure that accepts stablecoins, now stands as one of the few crypto sectors to surpass its 2021 performance metrics.
• The meteoric rise in stablecoin-enabled companies has captured significant mainstream attention, drawing institutional interest beyond traditional crypto-focused investors.
  • Circle's very successful IPO has served as a catalyst, demonstrating to traditional investors that stablecoin infrastructure can generate substantial returns and sustainable business models.
  • This institutional validation has given rise to a flood of venture capital deployment into the broader stablecoin ecosystem over the last few months.
• Regulatory developments have provided additional momentum for investor confidence in the sector.
  • Further developments around the GENIUS Act in the United States have pushed stablecoins into the regulatory spotlight, offering clearer frameworks that institutional investors view favorably.
  • This regulatory clarity has likely reduced perceived investment risk, enabling more traditional venture funds to allocate capital to stablecoin infrastructure projects.

Bitcoin Back to Dominating 

• Bitcoin dominance has resurged to 62% after experiencing a notable dip to 59% in May, representing Bitcoin's market capitalization relative to the total market capitalization of all crypto assets.
  • This metric serves as a critical barometer for market sentiment and potential altcoin season dynamics, with lower Bitcoin dominance typically indicating increased investor appetite for alternative cryptocurrencies.
  • The current upward trajectory suggests that capital flows continue to favor Bitcoin over smaller digital assets, potentially delaying the onset of a broader altcoin rally.
• The dominance recovery reflects a divergence between investment patterns as crypto gains traction on Wall Street.
  • While cryptocurrency has become increasingly popular among traditional financial institutions, altcoins have yet to experience a similar institutional frenzy, unlike Bitcoin's mainstream adoption.
  • This preference for crypto-related equities has likely contributed to the dampened levels of interest for altcoins. 
• The number of options available to investors also influences investment behavior.
  • Traditional investors have access to only a handful of large crypto-related stocks, such as Circle (CRCL), Coinbase (COIN), Robinhood (HOOD), and MicroStrategy (MSTR), which creates concentrated exposure pathways to the crypto sector.
  • In contrast, the altcoin space features thousands of individual tokens, fragmenting potential investment flows across a much wider universe of assets and diluting concentrated capital allocation.

Stablecoin Summer

• Ethereum stablecoin senders have surged to a new all-time high, exceeding 750,000 unique weekly users across major stablecoins including USDT, USDC, BUSD, and DAI.
  • This milestone represents the culmination of what appears to be "stablecoin season," characterized by heightened institutional attention and, more importantly, substantial growth in actual user adoption.
  • The steady upward trajectory throughout 2024 and into 2025 suggests that stablecoin usage has moved beyond speculative interest into genuine, utility-driven adoption.
• The current stablecoin landscape on Ethereum remains dominated by two major players, though the competitive dynamics are beginning to shift.
  • USDT maintains its position as the largest stablecoin with $73 billion in supply on Ethereum, while USDC holds $41 billion, together accounting for the majority of the approximately $134 billion total stablecoin market on the network.
  • Other stablecoins collectively represent around $20 billion in supply, indicating that new entrants have room to capture a meaningful market share despite the dominance of established players.
• The growing user base is driving increased competition among stablecoin issuers as they seek to differentiate their offerings.
  • As the market matures, companies are likely to compete more aggressively for users by offering lower transaction fees, enhanced yield opportunities, and incentives for potential holders.
  • This competitive pressure could benefit end users through improved services and reduced costs, while also spurring innovation in stablecoin design and functionality.
• The sustained growth in stablecoin usage reflects broader trends toward digital dollar adoption and crypto-enabled financial services.
  • As more traditional financial institutions and payment processors integrate stablecoin infrastructure, the user base expansion evident in these metrics may accelerate further, establishing stablecoins as critical infrastructure for digital commerce.

Circular Coins

• Circle Internet Group (Ticker: CRCL) IPO’d on 5 June 2025 at $31 per share and, as of the close on Friday, 20 June, had its share price standing at $240.28, marking a ~675 % gain in just twelve trading sessions.
  • The price surge accelerated after the U.S. Senate approved the GENIUS Act on 18 June
  • This cemented federal guard-rails for fully-backed stablecoins and positioned Circle, issuer of USDC’s ~$61 billion float, as the market’s regulatory first-mover.
• Coinbase Global (Ticker: COIN) is riding shotgun on Circle’s breakout, closing at a year-to-date high of $308.38 on 20 June.
  • The recent 3-day upswing saw the stock increase by 21.5% in just 72 hours from $253.85.
  • Investors and funds that missed the CRCL allocation have likely rotated into COIN as a catch-up play
  • Circle’s S-1 and follow-up commentary show it paid over 60% of its gross USDC-reserve income in 2024 as a distribution fee to its primary partner, Coinbase
  • Under the standing pact, 50% of all residual interest income on USDC reserves flows to Coinbase, so every uptick in USDC supply or front-end yields levitates Coinbase’s “Subscription & Services” line.
  • Based on a blog post from August 2023, Coinbase also holds a minority equity stake in Circle, meaning appreciation in CRCL provides an additional mark-to-market kicker to Coinbase’s balance sheet.
  • Though Coinbase's absence from the “Principal and selling stockholders" section of Circle's S-1 filing confirms its ownership is below 5% of Circle's equity.

Polymarket Knew It First

• Prediction markets on Polymarket, especially those linked to recent global tensions and geopolitical conflict, have seen a notable spike in open interest (OI), with Iran-related markets leading the surge last week
  • The market “US military action on Iran before July”, which is set to resolve next week, has seen OI grow from $249K two weeks ago to $6.19 million at the time of writing.
  • “Will the US officially declare war on Iran before July?” has also spiked from $0 to $3.04 million in OI over the same period.
  • Additional markets focused on Ali Khamenei, Iran’s supreme leader, have posted an average 10x surge in OI over the past several days.
  • The trend underscores how real-world events are increasingly being “gamed” and “financialized,” with Polymarket playing a central role in enabling that behavior.
• Meanwhile, one of the only other high-profile markets to experience an uptrend in its OI is the one centered on the NBA champion.
  • This market had $670K in OI at the start of 2025 and was standing at over $7.5 million on 23 June, just before Game 7 of the NBA Finals, which concluded with the Oklahoma City Thunder being crowned champions.
• Despite the surge in Iran-related markets, they still represent only a fraction of the total OI across the Polymarket platform, which currently exceeds $131 million.
  • Platform-wide OI has hovered near the $100 million mark for over 6 months, well below its all-time high (ATH) of over $510 million during the US presidential election cycle.
  • While OI remains 74% below ATH, and both monthly active traders and volume are under half of their ATH levels, new market creation is down just 23%.
  • The platform’s growing diversity of markets, reflected in the composition of OI, signals a shift from concentrated political wagering (e.g. US elections) toward broader, more event-driven speculation.