- Crypto market cap (excl. Bitcoin) drops 41% to $ 950 B.
- Bitcoin and COIN50 fall below 200-day moving averages.
Coinbase’s institutional analysis predicts that the upcoming crypto winter will become more severe because of global economic forces. The crypto market, excluding Bitcoin, experienced a major downturn of 41% since reaching its peak value of $1.6 trillion during December 2024 until settling at $950 billion at present. This shows the deep pessimism investors currently hold.
According to David Duong who serves as the institutional research chief at Coinbase the market decline stems from broad economic elements. Digital assets face decreased capital costs because governments continue to impose higher taxation while implementing financial limitations. Market participants show negative market predictions because the COIN50 index and Bitcoin trade below their 200-day moving averages.
The present market exhibits various points of resemblance to the 2022 cryptocurrency market collapse which led to a $2 trillion value decrease. The market for altcoins experiences low trading since investors prefer to avoid risky cryptocurrency assets. The increase in Q1 2025 venture capital funding failed to offset the substantial funding reduction which maintains a level half or two-thirds below its 2021-2022 peak values.
The current market situation has Coinbase looking toward stable cryptocurrency prices that should emerge during the middle through late stages of Q2 2025. The worldwide economic indicators’ stabilization because of reduced interest rates and easing inflation will drive market recovery during Q3 2025. Defensive investment approaches should be implemented by investors because of the present market uncertainties.
Economic Headwinds Drive Market Slump
Global economic instability causes most difficulties for the crypto market. U.S. authorities’ implementation of trade tariffs has triggered worldwide economic disputes, which negatively impact all market investment sectors. High interest rates, along with tightening monetary policy, reduced market liquidity when traders chose gold as their safer choice.
Bitcoin maintains superior stability compared to other cryptocurrencies since it reached its peak point before decreasing by 20%. Investors who represent advanced quality standards have begun to adopt Bitcoin as a part of the growing cryptocurrency market trend. The decline in Bitcoin’s price relative to its 200-day moving average indicated a bearish market trend towards the end of March.
The present time presents continuous obstacles that affect every sector of the financial industry. Price movements of the S&P 500 index became unpredictable due to fiscal spending cuts, which created financial problems for traditional equity markets. The risk-averse market conditions prevent new capital from investing in cryptocurrency markets as they focus on targeting small decentralized finance (DeFi) operations and Web3 gaming projects.
According to Coinbase, the newly developing U.S. regulatory structures lack sufficient capability to solve current market economic issues. According to the company’s report, crypto markets show strong responsiveness to worldwide liquidity conditions, and these conditions remain in a weak state.
Hope for Recovery in 2025
The company expresses market recovery optimism through its current business model that incorporates a risk-averse strategy. According to Duong, the market sentiment will quickly recover after changes occur in macroeconomic conditions. The quick market recovery of cryptocurrencies after external restriction releases has been documented through historical market data, especially during the 2022 market rebound.
Based on the research conducted by Coinbase, Q3 of 2025 is the most important. Central banks such as the Federal Reserve, together with other institutions, prepare interest rate decreases to increase market liquidity while attracting investment toward risky assets. The blockchain technology market continues to demonstrate solid confidence because Ethereum focuses on developing improved scaling solutions. Read more about Ethereum’s upgrades.
Users need to track market liquidity movements together with key economic data according to Coinbase’s instructions. The economic downturn requires a tactical asset allocation strategy that should involve purchasing high-quality Bitcoin and Ethereum assets. The crypto market has become more complex because AI-driven tokens display unique performance metrics to the firm.
