Spot DEX volume sinks to 2-year low as liquidity contracts

Stablecoins accounted for a large slice of that activity. Blockworks reported about $31.53 billion in stablecoin volume over the same period, close to 30% of all DEX flow. A high stablecoin share doesn't necessarily signal bullish demand, especially when the broader stablecoin supply is shrinking.

DeFiLlama data shows stablecoin market capitalization contracted by $2.23 billion in July, sliding to $308.473 billion. That decline came even as total crypto market capitalization rose by roughly $192 billion, an 11% gain. Until stablecoin supply begins expanding again, sustained rallies face a headwind, several analysts noted.

On-chain foreign exchange currency volume also weakened. Week-on-week FX turnover trended downward from the start of July, with total currency volume amounting to $646.12 million compared with $721.42 million in June.

Tokenized equities volume followed the same path. It landed at $1.405 billion in July, a decline from June's $3.56 billion. That June reading still stands as the second-highest level recorded since the product launched.