Coinbase Reports Bear Market Dynamics and Potential Q3 Rebound in Crypto

Coinbase’s April market review highlights a significant contraction in the crypto market, with the altcoin market cap decreasing by 41% since December 2024. Venture capital funding dropped by up to 60%, indicating potential emergence of another ‘crypto winter.’ Despite these challenges, shifts in market sentiment could lead to a recovery in Q3 of 2025. Analysts point out that Bitcoin’s movements are becoming less indicative of overall market trends as new crypto sectors evolve.

Coinbase has released a monthly market review indicating a potential rebound in the cryptocurrency market after recent contraction. Institutional investors were informed that from December 2024, the altcoin market cap fell by 41%, from $1.6 trillion to approximately $950 billion, with a low of $906.9 billion noted on April 9.

Venture capital investment in crypto projects has declined significantly, by 50% to 60% from 2021 to 2022. David Duong, Coinbase’s global head of research, suggests that several signals indicate a possible onset of a new ‘crypto winter,’ exacerbated by global tariffs and escalated negative sentiment. This scenario was echoed in related discussions on how trade wars affect stocks and cryptocurrency assets.

Macroeconomic conditions have hampered investor interest, limiting fresh capital inflows primarily affecting the altcoin segment. Duong attributes these challenges to uncertainties stemming from fiscal tightening, tariff implications, and overall investment paralysis in traditional risk assets, indicating a daunting cyclical outlook for digital assets and recommending caution for the next four to six weeks.

Despite current challenges, Coinbase analyst Duong asserts that shifts in market sentiment can occur rapidly, anticipating a positive market change in the latter half of 2025. Metrics for assessing market trends include risk-adjusted performance, the 200-day moving average, and the Bitcoin Z-score, which compares market and realised values to determine market conditions.

While the Z-score reflects crypto volatility, Duong believes the 200-day moving average is more effective in identifying trends as it smooths short-term fluctuations over 200 days of data. The report highlights that Bitcoin’s movements are becoming less reliable in gauging overall market trends, given the emergence of various sectors within crypto, such as DeFi and artificial intelligence, which possess unique market forces.

Analysis shows that Bitcoin fell into bear market territory by late March, whereas the broader Coin50 Coinbase index indicated a bearish trend since February’s end. Observations suggest that Bitcoin’s performance resilience against macroeconomic pressures has been notable and that its role as a store of value is growing.