- Bitcoin and the COIN50 index have fallen below their 200-day moving averages.
- Venture capital remains 60% below 2021 peak levels despite a modest rebound.
- Market stabilization could occur between mid and late Q2 2025, according to Coinbase.
Renewed crypto winter risks are rising, Coinbase Research warned this week, as key technical and macroeconomic indicators suggest the digital-asset market may be entering another prolonged downturn.
In a note published yesterday, Coinbase said Bitcoin has slipped below its 200-day moving average — a widely watched bearish signal.
The COIN50 index, which tracks top non‑Bitcoin assets on the platform, has also dropped below long-term support.
Adding pressure to markets are higher global tariffs and prolonged fiscal tightening, both of which have weighed on investor sentiment and constrained inflows into crypto.
The situation echoes the 2022 selloff, when more than $2 trillion of market value was wiped out over an 18-month period.
Altcoins have borne the brunt of the decline. Excluding Bitcoin, total crypto market capitalization has fallen 41% from its December 2024 peak, dropping to $950 billion.
That level is lower than any point recorded between August 2021 and April 2022, a period already marked by intense market turmoil.
Altcoins down 41%
According to Coinbase, continued outflows from altcoins highlight weakened appetite for higher-risk crypto investments.
Tokens outside the Bitcoin ecosystem have seen sharp selling amid thin liquidity and a lack of fresh capital.
The COIN50 index is now trading well below its 200-day average, signaling broad technical weakness across the sector.
Retail interest has also declined, while institutional flows remain limited. This indicates the price momentum seen in late 2024 has largely dissipated.
Many smaller projects are underperforming, particularly in niche segments such as decentralized AI, Web3 gaming, and tokenized real-world assets.
Funding remains low
Coinbase’s report also points to a stalemate in venture funding. Although investment volumes have seen a modest uptick since late 2024, they remain 50%–60% below the highs recorded during the 2021–2022 cycle.
That shortfall has left many early-stage startups without the capital needed to scale, forcing some to pause development or shrink operations.
The absence of fresh funding has slowed innovation across major verticals.
Many in the industry had expected decentralized finance, metaverse applications, and crypto crowdfunding models to drive the next bull cycle. Instead, those areas have largely stalled.
Macro weighs on sentiment
Coinbase cites external economic pressure as a major factor behind the recent deterioration.
Tighter monetary policy, elevated interest rates, and rising global tariffs have all chipped away at investor confidence.
David Duong, head of institutional research, said the investment environment has become “paralyzed” as both traditional and crypto markets face liquidity stress.
These macro headwinds have discouraged speculative behavior and limited capital flows into digital assets.
Traders have pulled back and shifted focus toward safe-haven assets as geopolitical risks and inflation concerns remain elevated.
Recovery could follow
Despite the bleak outlook, Coinbase believes the market could find a bottom between mid and late Q2 2025.
Stabilization in macro conditions — particularly a slowdown in inflation or any easing of interest rates — could help restore capital flows.
Coinbase warned of a potential crypto winter as altcoins drop 41% and Bitcoin breaks key support, with market capitalization falling to $950 billion, mirroring the 2022 downturn.
Duong suggested sentiment could reset quickly once market pressures ease, opening the door to a recovery in the second half of the year.
The report stops short of making bullish price forecasts but notes that tactical positioning may be useful in the current environment. Analysts recommend watching liquidity trends and macro data closely as signals of potential shifts in momentum.