Coinbase warns of a potential early crypto winter, with Bitcoin’s price down 20% since January. A bear market appears to be forming, with venture capital investments at half the levels of the 2021-2022 cycle. Despite some pro-crypto measures from Trump’s administration, aggressive tariffs have negatively impacted the markets. Analysts suggest taking a defensive trading stance ahead of a possible recovery later this year.
Coinbase has issued a warning indicating that the onset of a crypto winter might have arrived prematurely this year. In a recent research note, David Duong, the global head of research at Coinbase, expressed concern of a bear market significantly impacting cryptocurrencies, with Bitcoin experiencing a 20% decline since its peak in January.
Significantly, the average price of Bitcoin over the last 200 days has also fallen, reinforcing the bearish sentiment. Although venture capital investment picked up in the first quarter of 2025, it remains about 50% lower than the levels observed during the bullish 2021-2022 cycle.
The current market downturn contrasts sharply with the pre-inauguration optimism surrounding Donald Trump, who campaigned with pro-crypto pledges and received approximately $200 million in crypto donations. Investors had anticipated a bull market following his inauguration in January, especially with his policies aimed at supporting cryptocurrencies.
While Trump has made some moves such as freeing Silk Road operator Ross Ulbricht and attempting to create a Bitcoin reserve, analysts highlight the adverse effects of his aggressive tariff policies on global markets, contributing to an increased recession risk. Consequently, risk-sensitive assets like tech stocks and cryptocurrencies have faced notable declines.
Since January, the tech-heavy Nasdaq 100 index has fallen about 16%, while the cryptocurrency market has shrunk almost 28%, equating to a loss of nearly $1 trillion in value. Duong advises traders to adopt a defensive posture in the upcoming months, though he is cautiously optimistic about potential recovery by the third quarter of this year.
In other news, Galaxy Digital, with $43 billion in revenue, has been compared to major financial players like BlackRock, even claiming higher revenues than companies like Netflix and Visa, which raises questions about its valuation. Meanwhile, Ethereum’s recent upgrades haven’t sparked investor excitement as anticipated. A potential interest rate cut by the Federal Reserve by the end of June might positively influence Bitcoin prices.
Additionally, investment firm BlackRock has become a major player in Bitcoin, having accumulated over $48 billion in the digital asset through its spot Bitcoin exchange-traded fund since its launch last year, making it one of the world’s largest holders of Bitcoin.
