In recent years, the cryptocurrency market has experienced significant growth, partly due to the supportive stance of the Trump administration, which has encouraged broader institutional adoption of digital assets.

According to CoinGecko, a cryptocurrency data tracking platform, the total market capitalization of cryptocurrencies currently stands at $3.2 trillion, with a daily trading volume of approximately $197 billion. Despite its substantial size, the crypto market remains a relatively small segment of the global financial landscape.

However, regulators and investors remain concerned about potential spillover effects—whether issues in the loosely regulated crypto space could destabilize the broader financial system.

This week, Bitcoin, the largest cryptocurrency, fell below $90,000 for the first time since April. Over the past six weeks, the total market capitalization of cryptocurrencies has shed around $1.2 trillion.

Historically, Bitcoin’s price movements have correlated with broader market risk appetite. Data from the London Stock Exchange Group (LSEG) shows that Bitcoin’s one-month rolling correlation with the S&P 500 reached 0.84 this week, the highest level in six weeks (correlation values range from -1 to 1).

Below is an analysis of key areas where cryptocurrencies intersect with mainstream financial markets.

**Stablecoin Reserves** Stablecoins are cryptocurrencies pegged to real-world currencies, typically the U.S. dollar. Issuers hold reserve assets to back the tokens in circulation, claiming that holders can redeem them for dollars at any time.

Financial stability experts warn that large-scale redemption requests could trigger a "run" on stablecoin reserves, potentially affecting the banks holding these reserves or the underlying assets in which reserves are invested.

The stablecoin market is currently dominated by Tether, headquartered in El Salvador, with reserves totaling approximately $181 billion, including $112 billion in U.S. Treasuries. Its competitor, Circle, holds $24 billion in U.S. Treasuries.

**Cryptocurrency-Linked Stocks** In 2025, crypto-related stocks surged as more cryptocurrency firms went public. However, pure-play crypto stocks still represent a tiny fraction of the overall equity market.

LSEG data shows that stocks categorized under "blockchain and cryptocurrency" or "crypto mining" have a combined market capitalization of $225 billion, accounting for just 1.8% of the global stock market.

This figure excludes so-called "crypto treasury companies"—firms whose business models revolve around buying and holding cryptocurrencies. Beyond large institutions like Strategy, dozens of penny-stock companies have been acquired by crypto enthusiasts this year to bet on rising crypto prices.

Standard Chartered estimates that if Bitcoin falls below $90,000, half of these "crypto treasury companies" would see their Bitcoin holdings valued below their purchase costs.

LSEG notes that of the 173 companies that went public in the U.S. in 2025, only four were crypto-related, raising a combined $1.2 billion—about 3.3% of total U.S. IPO proceeds.

**Banks’ Exposure to Cryptocurrencies** Banks engage with cryptocurrencies in three primary ways, creating potential risks: serving crypto-related clients, holding stablecoin reserves, or offering crypto-related services like custody.

Some smaller banks specialize in crypto, leading to concentrated risks. In 2023, Silvergate Capital, a U.S. crypto-focused bank, collapsed due to concentrated deposit withdrawals.

This year, U.S. regulators eased restrictions on banks’ crypto-related activities, prompting other jurisdictions to reconsider their regulatory approaches.

Comprehensive data on banks’ crypto exposure is scarce, but available information suggests that while current exposure remains modest, it is growing.

A May report from the European Central Bank noted that eurozone financial institutions provided €4.7 billion in crypto custody services in 2024, up sharply from €400 million in 2023.

Data from the Basel Committee on Banking Supervision shows that, among countries voluntarily reporting, banks’ prudential exposure to cryptocurrencies reached €5.9 billion in the second half of 2024.

**Cryptocurrency Investment Funds** In January 2024, U.S. regulators approved Bitcoin exchange-traded funds (ETFs), attracting a new wave of institutional investors—including sovereign wealth funds and pension funds—to inject capital into the crypto market.

Morningstar Direct data reveals that the number of global digital asset exchange-traded products (ETPs) surged to 367 in 2025, up from just 104 in 2021.

However, Morningstar estimates that while crypto ETPs now manage $222.3 billion in assets, this pales in comparison to the $17.4 trillion managed by non-crypto ETPs worldwide.