Chainalysis Report: Why Did Western Europe Remain Resilient as the Global Crypto Market Cooled Down?

Crypto-focused data research firm Chainalysis released the 2026 Global Crypto Adoption Report. In its Western Europe section, the report notes that even as the global crypto market enters a downturn, Western Europe’s $2.08 trillion crypto economy remains resilient, posting slight positive growth.

Intra-regional dynamics are sharply diverging: the UK market is contracting; French users are shifting to self-custodied stablecoins amid fiscal pressures; and Spanish exchanges are attracting substantial cross-border European capital. Stablecoin holdings across the Western European market have surged significantly, with the Euro's share in crypto trading increasing, signaling an industry shift from speculation toward institutionalization. Below is the Chinese compilation of the Western Europe section of the report:

While the global crypto market entered a downturn cycle, Western Europe demonstrated strong resilience. During the reporting period (July 2025 to June 2026), the total size of Western Europe’s crypto economy reached $2.08 trillion, ranking second globally, with a modest 1.2% growth. Worldwide, only Sub-Saharan Africa, Latin America, and Western Europe recorded positive growth.

New regulatory frameworks, sustained influxes of institutional capital, and deepening integration with traditional finance are reshaping the region’s crypto landscape. However, divergent development paths are evident across countries: stablecoin adoption, the rising status of the Euro in crypto trading, and cross-border expansion of exchanges have emerged as common trends.

Christopher Beck, Co-CEO of leading European crypto infrastructure provider BS Digital, commented on this wave of change: “Institutional adoption is accelerating, with crypto assets slowly transitioning from emerging speculative instruments to mainstream financial products.”

All of this unfolds against a backdrop of an uncertain macroeconomic outlook in Europe and shifting user preferences, which directly dictate capital flows and market focus in crypto.

Six Markets Account for Two-Thirds of Western Europe’s Crypto Economy

The UK remains Western Europe’s largest crypto market at $424.5 billion, accounting for 20% of the regional total. As a traditional global financial hub with mature capital markets and banking sectors, the UK’s crypto ecosystem resembles a natural extension of its domestic financial services. Nevertheless, the market contracted by 8% during the reporting period, primarily due to declining trading volumes on decentralized exchanges (DEXs).

Germany ranks second at $288.8 billion, followed by France at $215.8 billion. Germany’s market saw a slight contraction, also driven by reduced DEX activity; France remained largely flat. Spain ($156.1 billion) and Switzerland ($132.8 billion) achieved growth, fueled primarily by increased activity on centralized exchanges (CEXs).

Including the Netherlands ($207.8 billion), these six nations collectively account for roughly two-thirds of Western Europe’s total crypto economy, highlighting the high concentration of crypto activities among top-tier countries.

Figure: Map of Western European Crypto Economic Scale

Industry experts widely agree that Europe’s crypto sector has moved past its unbridled growth phase and entered a stage of mature development. Faustine Fleuret, Head of Global Public Affairs at decentralized credit infrastructure Morpho, highlighted this shift:

“We can clearly see a transformation: people are no longer just experimenting with cryptocurrencies, but actively embedding blockchain into mainstream financial operations. Banks, asset managers, and fintech companies are gradually realizing that on-chain finance is not a parallel system competing with traditional finance, but rather a new foundational technology upon which entire business models can be built.”

Euro Gains Stronger Influence in the Crypto Market

The rising status of the Euro is one indicator of a maturing Western European crypto market, closely mirroring its role in traditional foreign exchange markets.

Data from the Bank for International Settlements (BIS) shows that the Euro was involved in 28.9% of global foreign exchange transactions in April 2025. Crypto order book statistics track unilateral trading pairs (Euro against tokens), differing from the bilateral methodology used in forex. For reference, we take half, or 14.5%, as a benchmark.

Chainalysis data indicates that the Euro is increasingly serving as the primary gateway for retail investors entering the crypto market. By the end of the reporting period, Euro-denominated trades accounted for 11.8% of crypto transactions priced in 33 major fiat currencies globally, a notable increase that is steadily approaching its baseline weight in forex markets.

Figure: Proportion of Euro-Denominated Crypto Trading Volume to Total Crypto Volume

This upward trajectory coincides with the rollout of the EU’s MiCA regulation. MiCA establishes a unified regulatory framework for all crypto asset issuers and service providers within the EU, reducing investor uncertainty. Once licensed, service providers can operate across all member states.

While the data cannot directly prove causality between the two, the rise in Euro trading volume likely benefits from market stability brought by unified regulation, alongside the overall expansion of the EU crypto market.

Laurynas Spangevičius, General Manager of Robinhood Europe, assessed the impact of MiCA: “The most significant regulatory shift for the European crypto industry has been the full implementation of MiCA. Clear rules have replaced regulatory uncertainty, giving long-term institutional investors the confidence to enter.”

Western Europe’s Stablecoin Holding Growth Far Outpaces Global Regions

Surveys reveal that stablecoins are taking up an increasingly larger share of digital asset allocations among Western Europeans, with personal wallet balances rising across all tracked countries.

This shift carries significant implications. As stablecoins become mainstream, Europe must address a core question: how to integrate these digital dollars and digital euros into the existing financial system.

Figure: Growth Rate of Stablecoin Holdings in Western European Personal Wallets

Total stablecoin holdings in Western European personal wallets skyrocketed by 131%, far exceeding the global growth rate of 52%. Austria and France led the surge. This wave of growth pushed Western Europe’s share of global stablecoin holdings from 3.4% to 5.1%.

Multiple drivers underpin this trend: European consumers seek diversified deposit and transfer tools, and MiCA’s clear entry requirements for Euro-stablecoin issuers have accelerated the segment’s development. As stablecoins achieve rapid adoption across Europe, their potential impact on the financial system can no longer be ignored.

Debate is already underway. In September 2026, the ECB and national central banks of the EU openly opposed a reserve rule for stablecoins under MiCA: current rules require ordinary stablecoin issuers to hold at least 30% of reserves in European bank deposits, with 60% for systemic important stablecoins. Central bankers worry that large-scale redemption runs could trigger sudden deposit withdrawals, sparking financial risks.

Traditional financial institutions are also positioning themselves. Jan-Oliver Sell, CEO of the consortium-backed, MiCA-compliant stablecoin project Qivalis, noted that compliant Euro-stablecoins already have clear use cases: serving as on-chain cash settlement tools for tokenized assets and supporting conditional programmable payments like pay-on-delivery between enterprises.

A spokesperson for Spanish multinational bank CaixaBank stated that investing in this area aligns with Europe’s goal of avoiding over-reliance on US dollar-stablecoins in the stablecoin sector.

Overall, Euro-stablecoins are poised to become a crucial component of Europe’s digital financial infrastructure, though regulators and banks continue to weigh the risks they pose to financial stability and monetary sovereignty.

Fluctuations in Euro Bond Yields Drive EU Bitcoin and Tokenized Gold Trading

Research also reveals a pattern: when Eurozone government bond yields rise relative to US Treasuries, the share of Euro-denominated Bitcoin and tokenized gold trading rises synchronously.

This phenomenon unfolds against a backdrop of growing market concerns over European public finances and sovereign debt risks. Years of high debt levels, successive economic shocks, and sluggish growth have gradually exposed fiscal vulnerabilities.

France is a focal point for markets, with soaring debt and political gridlock disrupting the bond market. In October 2026, France’s 10-year government bond yield breached 5.14%, hitting a 20-year high, reflecting investor anxiety over French fiscal health and political stability.

Based on weekly data from July 2025 to June 2026, Chainalysis compared yields on high-rated Eurozone and US bonds against Bitcoin and tokenized gold trading volumes, revealing a clear correlation.

When Euro yields rise relative to US Treasuries, the proportion of Euro-denominated Bitcoin and tokenized gold trading versus USD-denominated trading increases; as the spread narrows, Euro trading momentum cools.

Figure: Correlation Between Eurozone Store-of-Value Crypto Trading and the Spread Between High-Rated Eurozone and US Government Bonds

The magnitude also shows correlation. For every ~2 basis points the Euro yield rises relative to the US Treasury, Euro-denominated trading outpaces USD trading by ~7.5%; a 7 bps rise corresponds to ~12% outperformance. Conversely, when Euro yields fall relative to the US, Euro trading volume drops by 8% to 10%.

One interpretation is that when doubts arise regarding the Eurozone’s fiscal prospects, traders allocate Bitcoin and tokenized gold to their portfolios as alternative safe-haven assets. Subsequent data from France indirectly supports this trend, though the data only demonstrates correlation, not direct causality.

Prediction Markets: European Users Bet on Geopolitical Events, Preferring Negative Outcomes

Prediction markets allow crypto assets to serve purposes beyond mere speculation, enabling users to wager on geopolitical conflicts and economic outcomes. Chainalysis analyzed European wallet trading behavior on geopolitical event contracts.

This analysis captures data collected prior to ESMA’s July 2026 regulations, which classify such event contracts as retail binary options, effectively banning prediction markets across the EU. The UK also maintains related restrictions, and the analysis accounts for this evolving regulatory landscape.

Data shows that during the reporting period, European wallets allocated 74% of funds to negative outcomes in US-Iran-related binary prediction markets (global average: 49%). On average, however, short positions betting on negative outcomes underperformed those betting on positive outcomes.

Figure: Western European Capital Widely Bets on Negative Trajectories for US-Iran Relations

Figure: Western European Capital Incurs Losses Across All Categories in US-Iran Related Prediction Markets

This indicates that prediction markets are not only used to forecast event trajectories but also serve as channels for users to express geopolitical views. However, capital flows are disconnected from profitability: users anticipate trouble but find it difficult to monetize those predictions.

UK Market Shifts from Growth to Decline as EU Continues to Expand

For several years, the UK crypto market led Western Europe in growth, but the dynamic has reversed. While still the largest single market, the UK contracted by 8%; the rest of Western Europe grew 3.8% overall, with the EU region separately recording 2.2% growth.

This divergence raises two questions: Why did the UK grow so rapidly before? And why is the EU now more resilient to downturns?

Figure: Since 2022, the UK Crypto Economy Outpaced Other Western European Regions in Growth

MiCA’s impact provides crucial context. Initially rolled out in December 2024, increased compliance costs and regulatory uncertainty briefly suppressed growth. By July 2026, once service providers completed transition periods and secured licenses, MiCA’s dividends materialized: licensed providers could operate across all EU member states without applying for individual licenses in each country.

Thus, MiCA initially dampened and subsequently fueled EU market expansion. This round of growth occurred despite a bear market where global crypto market caps were cut in half.

The UK lacks this unified regulatory framework to buffer against downturn cycles. Market cooling also correlates with the FCA launching a new regulatory access channel for crypto in September, prompting many participants to wait and see.

Naturally, the data cannot attribute this solely to regulation. Market factors are equally complex, making it impossible to isolate MiCA’s exact impact, though the timing aligns closely.

New Dynamics in UK Stablecoins: Shifting from Cross-Border Tools to Domestic Transfer Workhorses

Stablecoin usage in the UK is evolving: domestic peer-to-peer stablecoin transfer volumes have surged significantly. No longer limited to cross-border remittances, stablecoins are rapidly addressing domestic liquidity needs.

Figure: The UK Leads the Expansion of Domestic Stablecoin Volumes in Western Europe

During the reporting period, domestic P2P stablecoin transfers in the UK reached $2.09 billion, up from just $109 million in the same period last year. The UK’s domestic stablecoin increment accounted for 65.2% of the total Western European growth, representing 60% of total domestic transfer volumes.

This contrasts sharply with other parts of Europe. In the UK, domestic transfer amounts are 1.32 times higher than cross-border P2P and service provider transfers; in other Western European regions, cross-border volumes are 4.38 times larger than domestic ones.

UK regulators also prioritized stablecoin payments in 2026. In June 2026, the Bank of England published a draft policy statement on systemic stablecoin regulation, establishing rules for large-scale stablecoin payments.

The BoE also imposed individual holding limits: maximum £20,000 per person for single systemic GBP stablecoins. This rule will define the role of stablecoins in household wealth management. On-chain data already hints at a broader shift: an increasing number of everyday UK users treat stablecoins as value storage tools rather than merely intermediary trading chips.

Figure: Proportion of UK Retail Wallets Converting Most Crypto Assets to Stablecoins Exceeds Other Major Western European Markets

During the reporting period, 1.03% of eligible UK retail wallets held at least 80% stablecoins (up from 0.66% the previous year), leading among six major Western European markets. Figures for other key markets stood at 0.54% for the Netherlands, 0.52% for Italy, 0.46% for Finland, 0.38% for Sweden, and 0.20% for Germany.

All six countries saw increases in this metric, with Italy and Germany showing higher multipliers (Italy 2.5x, Germany 2.3x, UK 1.6x), yet the UK’s absolute lead continues to widen.

Another key detail: the peak of this conversion wave occurred between July and September 2025, preceding Bitcoin’s October peak. This suggests the trend goes beyond simple bear-market hedging, reflecting a long-term, gradual shift in user habits. Continued tracking revealed that many users chose to maintain stablecoin positions even as market prices fell further.

Under French Fiscal Pressure, Users Flock to Self-Custodied Stablecoins

France stands at the center of Europe’s fiscal tensions. Burdened by high debt and a fractured parliament, efforts to cut spending and control deficits face stiff opposition. Austerity measures have sparked protests, and repeated legislative battles have eroded market confidence in France’s public finances.

Amid rising economic and political uncertainty, on-chain data highlights three clear signals of French users turning to self-custodied stablecoins for asset management: rising withdrawal ratios from centralized exchanges, increasing numbers of wallets holding stablecoins, and steadily growing wallet balances, indicating a desire for direct asset control.

Over three years, France jumped from 10th to 1st place among major Western European markets in the share of stablecoin-related withdrawals. During the reporting period, stablecoin withdrawals accounted for 54.2% of total FX withdrawals for French users, surpassing Germany. Transfers from exchanges to French wallets rose by 12% (vs. a 7% average in the rest of Western Europe), signaling greater asset self-custody on-chain.

Figure: France Rises from 10th to 1st Place in Exchange Withdrawal Share Over Three Years

French wallets holding stablecoins continued to climb: from 3,577 in June 2025 to 12,255 in June 2026, a 3.4x increase, compared to a mere 1.7x average in other Western European regions.

Figure: French Stablecoin Wallet Count Tripled, with Net Inflows to Exchanges Observed in 11 of 12 Months

Wallet growth tracked bond market pressures. Monthly growth averaged ~6% in mid-2025, spiked to 18% month-on-month following autumn bond market turbulence, and cooled back to 5% by June 2026 as sentiment stabilized. With data cutoff in June, subsequent October bond market shocks fall outside this statistical window, preventing observation of downstream effects.

Balance in French self-custodied stablecoins surged 192% during the reporting period, while French bank deposits grew by just 2%. Though stablecoin scale remains small compared to traditional savings, the growth rate is striking.

Figure: Balance in French Self-Custodied Stablecoins Surges 192%, Compared to Just 2% Growth in Bank Deposits During the Same Period

These trends reflect French residents seeking alternative channels for asset preservation amid uncertainty. It does not signify a loss of faith in the Euro, but rather represents a diversification strategy in portfolio allocation.

Spanish Exchanges Attract Users Across Europe

Capital inflows to Spanish crypto exchanges are no longer dominated by domestic users. Contributions from other European countries exceed local funding, positioning Spain as a pan-European crypto trading hub.

Since 2024, both domestic and cross-border funds flowing into Spanish exchanges have grown, but international inflows accelerated notably. During the reporting period, cross-border capital exceeded that of domestic users.

Figure: Sources of Funds for Spanish Exchanges Show Overseas Western European Users Now Outpace Local Users

Cross-border inflow growth is broad-based: countries that transferred over $100,000 to Spanish exchanges last year saw average growth of 198% during the reporting period (up from 100% the prior year); median growth rose from 82% to 162%. Italy and Portugal emerged as top funding sources: Italian transfer growth skyrocketed from 22% to 329%, while Portuguese growth surged from 36% to 751%.

Funds from other European countries flowing into Spanish exchanges grew by 79.1%, compared to a 24.6% overall growth rate for Spain’s domestic crypto economy. Since July 2023, Western European users have deposited a total of $984 million into Spanish exchanges, with $521 million flowing in during this reporting period.

Figure: Funding Inflow Growth for Spanish Exchanges Nearly Doubles, Rising from 100% to 198%

Gabriel Ayala, Director of Banking and Business Development for API at leading Spanish exchange Bit2Me, explained the drivers: some neighboring countries lack top-tier domestic platforms. “Portugal’s market size and linguistic nuances make it difficult to scale a homegrown platform; Italy’s complex regulatory environment and fragmented market hinder the formation of a large domestic exchange.”

Spanish platforms seized this opportunity, leveraging compliance capabilities and scale advantages to compete pan-Europeally. MiCA’s unified regulatory framework further lowered barriers to cross-EU operations. The rise of Spanish exchanges epitomizes the integration of European national markets.

Europe’s Crypto Industry Turns a New Page

Widespread stablecoin adoption, cooling DEX trading in select markets, and exchanges absorbing cross-border users, combined with shifting habits, capital preferences, and macro factors, are collectively reshaping Western Europe’s crypto landscape. Summarizing the trend, Robinhood’s Spangevičius noted that the European crypto industry has evolved from fragmented retail speculation toward structural maturity.

Financial risks, geopolitical events, and regulatory shifts are transforming global digital asset trading, making Europe a prime lens for observing these developments. Whether the industry can sustain progress depends not only on continued institutional capital inflows, but also on how practitioners adapt to evolving financial landscapes and regulatory frameworks.

As institutional participation deepens, consumer protection, regulatory harmonization, and integration between crypto markets and traditional banking systems will emerge as pivotal issues determining the industry’s long-term trajectory.

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