Crypto market Drops 41%, Yet Coinbase Experiences Q3 Resurgence
If you’ve noticed a lull in the trading market recently, you’re not imagining things. As highlighted in Coinbase’s Monthly Outlook for April 2025, the statistics reflect what many investors and developers have been feeling: we are firmly in a cooling-off phase. Nevertheless, a crypto resurgence may be on the horizon later this year.
The total trading market capitalization of altcoins—everything apart from Bitcoin—has seen a decline of approximately 41% since December, plunging from $1.6 trillion to near $950 billion. That’s a significant drop. While we aren’t in total collapse mode, it’s a substantial decrease that’s testing the patience of everyone involved.
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Crypto is entering a downtrend phase with the total market cap down 41% from December’s peak. The COIN50 index falling below its 200-day moving average indicates ongoing weakness. However, a potential stabilization in late Q2 and a recovery in Q3 could occur if global conditions improve#CryptoMarkets pic.twitter.com/rdiwvNjhbh
— NeomaVentures (@NeomaVentures) April 16, 2025
Furthermore, it’s not just the asset prices that are feeling the pinch. Venture capital investment, which is critical for startups in the sector, has also decreased. Compared to the peaks of 2021 and 2022, VC activity has dropped by 50–60%. The main culprits? A chaotic macroeconomic environment. Factors such as inflation, interest rate fluctuations, geopolitical strife, and the persistent fear of further economic downturns have left investors jittery. Consequently, we’re witnessing fewer checks being written, slower fundraising rounds, and a lot of “let’s pause and observe.”
Trading market Sentiment Indicators
David Duong, the head of research at Coinbase, doesn’t mince words. He asserts that the data indicates we’ve transitioned into a neutral-to-bearish trading market state, suggesting that the optimistic trend peaked back in February. This aligns with the sentiments of many traders who are questioning, “Is that all there is?”
He emphasizes several critical indicators, particularly the 200-day moving average, which revealed that between November 2021 and November 2022, BTC experienced a drastic decline of around 76%. When adjusting for risk, this drop resembles the S&P 500’s 22% dip.
In essence, both assets exhibited significant movements compared to what is typically expected, even if their percentage declines look different.
Another key measurement addressed was the Bitcoin Z-score, which evaluates how extreme current prices are in relation to historical standards. Both indicators are signaling caution, indicating yellow rather than red, but certainly not green.
Z-scores are effective for the trading market due to their adjustment for the volatility of price fluctuations, yet they have their limitations. They can be more complicated to compute and may not swiftly identify trends, particularly in more stable markets. For instance, the model indicated the end of the last bullish trend occurred in late February, but since then, it has categorized everything as “neutral,” suggesting it can lag when market shifts occur rapidly.
In summary, labeling this period accurately isn’t wrong: it’s a time for reflection, a reset, and potentially the initial stages of another “mini crypto winter.”
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Opportunities for Crypto Recovery in Late 2025
Nonetheless, Duong remains bullish, perceiving rays of hope ahead. Although Q2 may present challenges, Q3 could prove to be markedly different.
What fuels this optimism? Coinbase argues that such crypto market pullbacks can have a purging effect. They eliminate distractions, recalibrate valuations, and temper overly enthusiastic sentiment. Moreover, as sentiment nears its nadir, a quick and robust recovery could occur, especially if conditions in the broader economy improve or new trends emerge.
This is not a guarantee, of course. It does serve as a reminder that the crypto landscape is inherently cyclical. Declines happen, but they often lead to a more robust comeback.
At present, the market is in a period of rest. Prices have dipped, funding has tightened up, and numerous investors are remaining cautious. Yet, as Coinbase highlights, this doesn’t equate to the end of the game. These pauses could set the stage for the next big movement, particularly if trust is restored and macroeconomic challenges ease.
Therefore, whether you’re involved in building, investing, or merely observing from a distance, pay attention to the latter half of 2025. A crypto resurgence may be on the cards, and the crypto market could surprise you once more.
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Key Takeaways
- The non-BTC crypto trading market capitalization has diminished by 41% since December 2024, decreasing from $1.6 trillion to roughly $950 billion.
- Investment from venture capital firms in the crypto sector has declined by 50–60% from previous high levels, as investors grapple with macroeconomic uncertainties.
- Research from Coinbase indicates that the crypto market is experiencing a neutral-to-bearish phase, with metrics such as the 200-day average and Bitcoin Z-score signaling caution.
- Despite the downturn, Coinbase identifies potential for a rebound in Q3, emphasizing that market corrections often reset valuations and sentiment before a recovery.
- Although Q2 may continue to be turbulent, the latter part of 2025 could herald the initiation of a fresh bullish, provided macro conditions improve and new themes arise.
The post Market Slumps 41%, But Coinbase Sees Q3 Comeback appeared first on 99Bitcoins.
