Coinbase Institutional reports signs of a potential “crypto winter” with significant market downturns and declining venture capital investments. Bitcoin shows relative strength, but broader crypto market capitalisation has significantly dropped. Systemic issues exacerbated by macroeconomic factors persist, yet there may be signs of stabilisation ahead late Q2 2025.
Recent analysis from Coinbase Institutional indicates potential signs of a new “crypto winter” within the cryptocurrency market. Despite Bitcoin experiencing a temporary price recovery, broader market indicators are exhibiting caution amid ongoing macroeconomic concerns and a decline in capital inflows into the sector.
David Duong, Coinbase Institutional’s Head of Research, noted that the total cryptocurrency market capitalisation, excluding Bitcoin, has dropped by over 41%, now approximately $950 billion from a peak of $1.6 trillion in December 2024. This figure marks a 17% decline compared to the same period last year and is below levels observed between August 2021 and April 2022. In contrast, Bitcoin’s performance shows a smaller decrease of 20%, increasing its market dominance.
Duong pointed out the retreat of venture capital investments in the crypto space, which remains 50% to 60% lower than the peak levels of the 2021-2022 cycle. This retreat is constraining the availability of new liquidity for altcoins, thus raising concerns regarding the overall market health. To enhance analysis accuracy, Duong advocates considering risk-adjusted metrics and long-term moving averages rather than short-term price fluctuations, which can be misleading.
During the significant market correction from November 2021 to November 2022, Bitcoin dropped 1.4 standard deviations below its historical average. This is comparable to a 1.3 standard deviation decline observed in equities during that timeframe. Additionally, Coinbase Institutional monitors the 200-day moving average (200DMA) to track bull or bear trends; Bitcoin’s fall below its 200DMA in March was interpreted as a bearish signal, while the COIN50 Index has been in bear territory since February.
The report highlighted systemic pressures from high interest rates, trade tariffs, and persistent macroeconomic uncertainties, all of which have negatively impacted traditional and digital assets alike. Duong remarked that despite positive regulatory changes in the US, such as increased institutional participation, these factors have not yet reversed the prevailing bearish trend. However, he remains cautiously optimistic.
Duong advised investors to maintain a defensive stance, although he forecasted potential sentiment stabilisation around mid-to-late Q2, which could pave the way for a recovery in Q3 2025. He underscored that market resets can occur rapidly, signifying the importance of preparation for long-term investors.
