Analysts at Coinbase believe that the digital asset market may be entering a new phase of decline. Indicators suggest a potential shift toward a prolonged downturn: the crypto market capitalization outside of Bitcoin has dropped by 41%, and venture investments have returned to pre-2021 boom levels. The decline in interest toward risk assets is intensifying against a backdrop of macroeconomic instability.
Market Capitalization Has Dropped by Nearly Half
According to a new Coinbase report, the total market capitalization of crypto assets excluding Bitcoin fell from $1.6 trillion in December 2024 to $950 billion by mid-April. This is a 41% drop and 17% below the same period last year. Such a level was last observed between August 2021 and April 2022.
Venture Capital Is Not Rushing Back
Despite a slight recovery in the first quarter of 2025, the volume of venture capital investments in crypto startups remains 50–60% below the peaks of 2021–2022. According to Coinbase experts, this is particularly affecting secondary assets — altcoins that are more dependent on new capital inflows.
Global Risks Are Pressuring the Market
The problems in the crypto market are being exacerbated by external factors: tighter monetary policy, tariff tensions, and general market uncertainty are all negatively affecting risk assets. Even with the possibility of regulatory easing in the U.S. amid the confirmation of the new SEC chair, the path to recovery remains challenging.
Formal Signs of Decline
Coinbase notes that the classical metric — a drop of more than 20% — is poorly applicable to cryptocurrencies. Unlike stocks, digital assets often move by dozens of percentage points in short periods. According to analysts, the absolute value of the drop is less important than market resilience to external shocks and liquidity.
Bitcoin and Altcoins Are Showing Different Trends
While Bitcoin is technically holding above some critical levels, the broader market is behaving differently. The COIN50 index, which includes the top 50 cryptocurrencies by market capitalization, decisively settled below its 200-day moving average as early as February. This points to a likely bearish trend across the market, despite the relative resilience of BTC itself.
Coinbase considers the break below the 200-day average to be a more reliable indicator of the start of a bear market. Both Bitcoin and the COIN50 index have recently crossed this level downward, confirming a prolonged deterioration in market sentiment. Analysts are also using risk-adjusted indicators (z-score) to more accurately interpret the scale of the decline.
The Model Points to February as the Turning Point
According to Coinbase models, the crypto market entered a bearish phase at the end of February 2025. This coincides with the beginning of a large-scale correction in altcoins and a capital outflow. The current state can be described as “neutral” but with a trend toward deeper decline.
Reference Points and Historical Parallels
Coinbase analysts note that, unlike short-term volatility spikes such as the spring 2020 crash due to COVID-19, the current downturn is developing amid systemic pressure — declining liquidity, waning investor interest, and worsening macroeconomic forecasts. According to them, such conditions most often lead to prolonged bearish phases.
Conclusions
Against the backdrop of a cumulative drop in market capitalization, declining venture investments, and deteriorating liquidity, Coinbase recommends taking a “defensive position” and avoiding aggressive investments. Nevertheless, analysts believe the market may find a “bottom” in the middle or end of the second quarter of 2025, which would create conditions for a recovery in the third quarter.
Previously: What Investors Should Do in a Falling Crypto Market — Experts Advice
This post is for informational purposes only and is not an ad or investment advice. Please do your own research making any decisions.
