Market watchers are showing renewed optimism as July comes to an end, with Bitcoin reserves on cryptocurrency exchanges dropping by 2% throughout the month. This decline signals bullish momentum, as fewer coins on exchanges typically means investors are moving their holdings into long-term storage, expecting price appreciation ahead.
The 2% monthly decrease might seem modest, but it extends a broader pattern of declining exchange reserves that started back in January. When traders pull Bitcoin off exchanges, it usually indicates they’re betting on future price increases rather than looking to sell in the near term.
Legislative Wins Drive Stablecoin Growth
July proved to be a landmark month for cryptocurrency legislation in the United States. The House of Representatives successfully passed three separate crypto-related bills, with President Donald Trump signing the GENIUS Act into law. This groundbreaking legislation establishes clear regulatory guidelines for stablecoins, while the CLARITY Act continues making progress through the Senate.
The regulatory clarity has already started paying dividends for the stablecoin sector. July saw nearly $4 billion added to total stablecoin supply, pushing the overall market capitalization beyond the $250 billion milestone. Activity levels have surged alongside the growth, with monthly active addresses jumping over 20% to reach more than 38 million users.
Trading volume has been equally impressive, with stablecoins processing over $7 trillion in total transaction value during the first quarter of 2025. Sygnum’s chief investment officer Fabian Dori highlighted how the GENIUS Act provides the confidence organizations need to build innovative applications that go beyond current customer needs.
Everyone’s saying the space’s got no clear direction right now,
but crypto this week felt like a movie!
BTC hit a fresh ATH, @Calderaxyz launch made people millions over night and capital kept flowing in from every corner
So let’s take a quick look at everything that played… pic.twitter.com/SYuUBGmhhu
— Defi Queen ( 💙, 🧡, 💜) (@VanessaDefi) July 19, 2025
Bitcoin Supply Shortage Concerns Mount
Exchange reserves tell an interesting story about Bitcoin holder behavior. July marked a historic milestone, with less than 15% of Bitcoin’s total supply sitting on exchanges for the first time since 2018. Looking at the bigger picture, exchange reserves have fallen 14% since January began.
This supply squeeze has analysts talking about a potential “supply shock” scenario. Crypto Chief, a prominent Bitcoin analysis account, pointed out the unusual disconnect between Bitcoin’s recent all-time highs and the rapidly declining supply available on over-the-counter desks and exchanges.
Bybit CEO Ben Zhou offered a different perspective during a July press conference, suggesting the trend might reflect market uncertainty. He noted that declining exchange reserves often indicate reduced trading activity when investors expect price volatility ahead.
Real-World Assets Cross Major Milestone
Tokenized real-world assets continued their impressive run, with total value surpassing $25 billion after growing 2.5% in July alone. The sector has exploded by 260% this year, driven primarily by tokenized private credit and US Treasury debt products.
Tokenized stocks emerged as a particular bright spot, growing 15% to exceed $400 million in total value. Robinhood’s announcement that it would begin offering RWA trading helped fuel interest, with tokenized stock addresses skyrocketing nearly 700% throughout the month.
However, regulatory questions remain around tokenized stocks, especially when private companies like OpenAI offer token-based “equity” without traditional ownership rights. Binance noted in a recent report that clearer regulatory frameworks should drive continued growth and attract more major industry participants.
State-level crypto legislation also advanced during July. Missouri introduced crypto ATM regulations and recognized gold, silver, and metals-backed digital currencies as legal tender. New Hampshire established a committee to study regulatory frameworks for stable tokens and RWAs, with findings due by November 1st. Oregon updated its abandoned property laws to include cryptocurrencies after three years.
Arizona’s story went differently, with Governor Katie Hobbs vetoing a bill that would have created a state cryptocurrency reserve from seized assets. The governor cited concerns about removing incentives for local law enforcement cooperation on digital asset cases.
International regulatory progress continued across seven countries. Hong Kong finalized its stablecoin rules and launched a public registry for licensed issuers. European markets saw Bybit, OKX, and CoinShares all receive licenses under the MiCA framework, with operations launching in Austria and France. Germany approved AllUnity’s euro-denominated stablecoin project from DWS and Deutsche Bank, while Singapore granted Bitstamp approval to serve local customers.
Potential Market Headwinds
Despite the positive regulatory developments and supply dynamics, current market sentiment suggests caution among traders as technical indicators and trading patterns point toward potential near-term volatility. The combination of declining exchange liquidity and regulatory uncertainty in some jurisdictions may create challenging conditions for price discovery in the coming weeks.
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