Crypto Activity Shows Signs of Recovery, But Liquidity Remains Limited

Crypto activity picked up in July, but liquidity inflows remained weak. The month saw some recovery signs, particularly in DeFi lending, where internal stablecoin liquidity remains high.

According to Cryptorank data, active DeFi loans rose by 7.2% in July, from $20.7B to $22.2B. This marks the first month of growth for DeFi lending in 2026, after five months of decline.

The overall value locked in DeFi increased from $68B at the beginning of the month to over $74.9B by July 31. Aave's lending activity expanded in July, indicating a slow recovery attempt for crypto activity.

Liquidity allocation shows caution despite robust crypto activity. The total supply of stablecoins contracted by 0.6% in July, down to around $312B. Inflows from ETF trading remained weak, and unlike last year, inflows from treasury companies have frozen to a halt, even for BTC.