In its latest market report, Coinbase presents a mixed outlook for the cryptocurrency sector, underscoring signs of decline while hinting at the potential for recovery later this year.
Released on April 15, the report reveals a significant contraction in the altcoin market, which has fallen by 41% since December 2024. The altcoin market capitalization, which stood at $1.6 trillion in December, has dropped to approximately $950 billion by mid-April 2025, reaching as low as $906.9 billion on April 9. The decline is compounded by a 50-60% reduction in venture capital funding for crypto projects, marking a sharp decrease from the highs seen during 2021-2022.
David Duong, Coinbase’s global head of research, pointed to multiple factors contributing to this downturn, including global trade tariffs, persistent economic uncertainty, and a decrease in investor sentiment. Duong suggested that these challenges could signal the onset of a new “crypto winter,” a term used to describe extended market downturns. He attributed much of the weakening interest in crypto to broader macroeconomic pressures, such as fiscal tightening and increasing tariffs.
Despite the grim outlook, Coinbase does not dismiss the possibility of a market rebound. The report indicates that the market may stabilize by the middle of Q2 2025, with a potential recovery taking shape in Q3. However, Coinbase cautioned against relying on traditional measures like a 20% drop to define bear markets, recommending instead more sophisticated metrics, such as risk-adjusted returns and the 200-day moving average, to assess market trends more accurately.
Bitcoin, in contrast to altcoins, has experienced a relatively more stable performance. Although it has seen some declines, it has not suffered as steep losses as many altcoins. Nevertheless, Coinbase’s data reveals that Bitcoin’s price recently dipped below its 200-day moving average, a key technical indicator signaling broader market shifts. Additionally, the Coinbase COIN50 index, which tracks the top 50 non-Bitcoin tokens, has also fallen below its 200-day moving average, further suggesting continued market weakness.
The report also highlights the volatility of newer sectors, including meme coins, decentralized physical infrastructure networks (DePIN), and artificial intelligence-related tokens. These sectors have been particularly susceptible to price fluctuations, adding to the overall instability of the market. Duong noted that as Bitcoin increasingly becomes a “store of value,” evaluating the broader crypto market may require new approaches that account for the sector’s growing diversity.
While the short-term outlook remains cautious, Coinbase remains optimistic about a potential market recovery later in 2025. The firm advises investors to remain flexible and cautious, as market conditions continue to evolve. Should global economic factors improve, Coinbase anticipates a stronger market in the second half of the year.
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