- The total market cap of cryptocurrencies (not including Bitcoin) has fallen to $950 billion, a 41% decline.
- David Duong, director of global research at Coinbase, thinks these signs are similar to previous crypto winters.
A recent research from Coinbase suggests that the digital asset ecosystem may be entering a new crypto winter due to increasing structural and macroeconomic constraints.
After reaching a high of $1.6 trillion in December 2024, the total market cap of cryptocurrencies (not including Bitcoin) has fallen to $950 billion, a 41% decline. Due to this drop, present values are much lower than they were during most of the time between August 2021 and April 2022. Thus, indicating a dramatic worsening of market sentiment.
According to the report, the market fell because of global economic challenges. Including the return of tariffs and continuing fiscal tightening. New funds are pouring into the cryptocurrency market as a result of the increased uncertainty. And risk-off sentiment felt by financial markets caused by these reasons.
Defensive Stance
Although VC activity increased somewhat from the previous quarter in Q1 2025, according to Coinbase, financing is still 50-60% lower than it was during the peak of the 2021-22 bull cycle. Speculatively funded cryptocurrency projects have been hit the hardest by this.
Bearish signs have been exacerbated by the fact that Bitcoin and the COIN50 index, which follows the 50 largest tokens by market size, have both fallen below their 200-day moving averages (200DMA), a technical indicator of an extended decline.
David Duong, director of global research at Coinbase, thinks these signs are similar to previous crypto winters and show that a “defensive stance” is necessary.
Macroeconomic uncertainty and poor performance in conventional stock markets cast a shadow over the route to a wider recovery. However cautious hope for stabilization in mid-to-late Q2 2025 is a bright spot.
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