The recent steep decline in crypto valuations and the breakdown of key technical indicators point to the potential start of a new bear market for digital assets, according to a new report from Coinbase. The report warns of a possible “crypto winter” marked by falling prices, reduced liquidity, and waning investor enthusiasm. The total crypto market cap, excluding Bitcoin, has dropped significantly since December 2024, sitting at $950 billion as of mid-April. This decline is accompanied by a decrease in venture capital investment and broader macroeconomic challenges, signaling a fragile outlook for crypto in the near term.
David Duong, Global Head of Research at Coinbase, highlights recent declines in Bitcoin and the COIN50 Index, both breaking below their 200-day moving averages. This suggests a bearish cycle, with the altcoin market experiencing sharper losses. Traditional definitions of bull and bear markets may not be applicable to the crypto space, given the high volatility. Coinbase recommends utilizing risk-adjusted performance measures and the 200DMA trend for a more nuanced view of market conditions. Bitcoin’s decline, along with the COIN50 Index, indicates potential bear market territory.
While Coinbase advises a defensive stance in the short term, it remains cautiously optimistic about the second half of 2025. The report suggests a potential bottoming out by the end of the second quarter, leading to a stronger recovery in the third quarter. The market’s complexity is highlighted, with sectors like DeFi, DePIN, and AI-driven agents expanding and diverging in performance and risk. As Bitcoin matures as a store-of-value asset, understanding the broader crypto market requires more granular tools beyond treating it as a monolith.
Despite the challenges, Coinbase believes the long-term fundamentals for crypto remain intact. However, until macroeconomic conditions stabilize and capital flows back into the space, volatility and caution are likely to dominate. The report emphasizes the need for discipline and selectivity in current market conditions. As sentiment in crypto can change quickly, the environment calls for a cautious approach. With a potential bottom in sight, the market may see a stronger recovery in the second half of the year.
