The Coinbase report suggests that the crypto market may stabilise in late Q2 and rebound in Q3, despite entering a possible bear market. The total crypto market cap has declined by 41%, while VC investments remain significantly lower than previous highs. Coinbase recommends using risk-adjusted returns and moving averages for market analysis, noting weaknesses in altcoins and increased volatility. The firm remains cautiously optimistic for a potential market recovery later in the year.
Coinbase has indicated that the cryptocurrency market is potentially entering a bearish phase but anticipates a price stabilisation between late Q2 and an eventual rebound in Q3. In its April 15 report, it outlined the total crypto market cap (excluding Bitcoin) has dropped 41% from its December 2024 peak of $1.6 trillion to approximately $950 billion, while venture capital investments remain 50-60% below levels seen in the 2021-2022 cycle.
Economic factors, including global tariffs and uncertainty, have further pressured altcoins. Historically, investors have seen price dips of 20% as indicators of a bear market; however, Coinbase argues that this criterion is less applicable to cryptocurrency. They advocate for the application of risk-adjusted returns alongside the 200-day moving average for better market analysis. Notably, while Bitcoin’s decline has been under 20%, it has dropped below its 200-day moving average.
The report highlights Coinbase’s COIN50 index, which tracks the top 50 non-Bitcoin tokens, also dipping below the critical moving average. This scenario often implies prolonged market weakness. Bitcoin’s marginal decline is contrasted by the steeper losses faced by numerous altcoins.
Coinbase underscores increased volatility within newer crypto sectors, such as memecoins, DePIN projects, and AI-related tokens, suggesting that reliance on Bitcoin alone for market assessment may be insufficient. Broader metrics like the COIN50 index are recommended for a comprehensive overview of investor sentiment.
Despite the current challenges, Coinbase expresses cautious optimism, predicting the market may bottom by mid-to-late Q2 2025, with a recovery possible in Q3 if global conditions improve. Until then, they advise a cautious and adaptive approach to investment, given current liquidity constraints and reduced risk tolerance among investors.
