Cryptocurrency markets are entering a phase characterized by heightened uncertainty and sustained selling pressure, as major assets struggle to regain bullish momentum. Bitcoin remains capped at sub-$90,000 levels and has repeatedly failed to attract enough demand to turn resisters into supporters.
At the same time, Ethereum is experiencing increased volatility and renewed selling pressure, reflecting widespread risk aversion across the market. Sentiment has weakened and price movements suggest investors are becoming increasingly selective rather than aggressively positioning for upside.
However, according to analysis by XWIN Research Japan, the most important changes currently occurring in cryptocurrencies are not directly visible on price charts, but rather in where and how capital is deployed. On-chain data shows that global liquidity within the cryptocurrency ecosystem is leaving the market. Instead, the shape changed.
The total supply of ERC20-based stablecoins has expanded to approximately $160 billion and is hovering around an all-time high. This supply briefly contracted during the risk-off environment in 2022, but has since resumed a clear and sustained upward trend.
This action does not indicate that capital is fleeing cryptocurrencies. Rather, this reflects a temporary reduction in risk while the funds remain fully within the ecosystem. Capital is stored in stablecoins as “standby liquidity”, sitting on the sidelines and ready to be deployed as soon as clearer directional signals emerge. Liquidity has not disappeared. It simply stands still, patiently, waiting for the verdict.
Japan’s strategic position in the global capital shift
This analysis also highlights that this change in global capital behavior will have a meaningful impact on the Japanese crypto market. As regulatory clarity improves and the tax framework gradually eases, Japan stands to benefit from the return of domestic capital, which has remained cautious in recent years.
Coupled with renewed interest from retail investors, this re-entry of sideline capital could deepen local liquidity, improve price discovery, and strengthen Japan’s role in the broader global cryptocurrency landscape.
A key factor in this transition is the growing relevance of JPYC, Japan’s yen-denominated stablecoin. While USD-based stablecoins continue to dominate global cryptocurrency flows, a yen-native digital currency provides a strategic differentiator for Japan.
JPYC is not limited to speculative trading use cases. It is increasingly seen as an infrastructure layer that can support real economic activity. This includes not only integration with Web3 services, but also integration with domestic and cross-border payment applications that more closely align with Japan’s existing financial system.
Looking to the future, the report suggests that Japan’s crypto market may gradually move away from a narrow focus on short-term price speculation. Instead, it could evolve into an ecosystem where capital actively circulates and is deployed in real-world use cases. Ultimately, how effectively Japan absorbs and channels this global liquidity will play a central role in determining the market’s next stage of growth.
Crypto Markets Test Structural Support Amid Widespread Risk-Off Sentiment
Cryptocurrency market capitalization has been unable to sustain momentum above recent highs, showing clear signs of structural stress. As the weekly chart highlights, market capitalization is trending back toward the $2.9 trillion to $3.0 trillion zone, an area that currently serves as a key inflection point for the broader market. This level coincides with the rise in the 100-week moving average and the 200-week moving average, reinforcing its importance as medium- to long-term support.
The rejection from the $4 trillion region signals a decisive change in market structure. After a period of expansion from 2024 to early 2025, the market entered a correction phase characterized by a decline in high prices and a weakening of the ability to follow top prices. Volume movements support this interpretation. In other words, while selling pressure increased during the down week, there was relatively modest participation in the rebound attempt.
Despite the pullback, the long-term trend has not completely broken. The market remains well above its 2022-2023 baseline, suggesting the move is more akin to a consolidation or valuation reset than a complete structural collapse. However, continued trading below short-term moving averages suggests risk appetite remains subdued.
For the bullish structure to be reaffirmed, market cap would need to stabilize above the $3 trillion threshold and regain intermediate resistance around $3.3-3.5 trillion. Failure to maintain current support will result in a deeper retrace of the market towards the $2.4 trillion to $2.6 trillion region where strong demand has emerged in the past.
Featured image from ChatGPT, chart from TradingView.com
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