Coinbase is raising a red flag over the state of the crypto market, warning that conditions may be slipping into bear territory. However, the U.S.-based exchange remains cautiously hopeful that a turnaround could begin between May and June, potentially setting the stage for a more bullish third quarter.
In its latest monthly market outlook released on April 15, Coinbase highlighted a significant downturn in the broader crypto space. Excluding Bitcoin, the total crypto market capitalization has dropped by 41% from its December 2024 peak of $1.6 trillion, now hovering around $950 billion.
The report also noted that venture capital activity has yet to rebound meaningfully, remaining 50–60% below the peak levels recorded during the 2021–2022 bull cycle. Combined with global economic uncertainties and rising tariffs, these factors have added mounting pressure—especially on altcoins.
While a 20% price drop is typically used to define a bear market, Coinbase argues this metric is too simplistic for crypto. Instead, it recommends tracking risk-adjusted returns and the 200-day moving average to better gauge long-term trends. Currently, both Bitcoin and the COIN50 index—a tracker of the top 50 non-Bitcoin tokens—have dipped below their 200-day averages, a signal often associated with extended market weakness.
Bitcoin, though down less than 20% from its recent high, remains relatively stable compared to altcoins, which have taken sharper hits. The gap, according to Coinbase, highlights growing volatility in emerging sectors such as memecoins, decentralized physical infrastructure (DePIN), and AI-related crypto tokens.
Given these shifts, the report suggests that relying solely on Bitcoin’s price as a market barometer may no longer provide the full picture. Broader indicators like the COIN50 are increasingly vital for assessing investor sentiment and market dynamics.
Despite the current downturn, Coinbase believes the crypto market could find its bottom by late Q2 2025. If macroeconomic conditions begin to stabilize, a stronger rebound might follow in Q3. In the meantime, the firm advises investors to stay cautious and adapt to changing market conditions, as liquidity remains thin and risk appetite subdued.
Meanwhile, Coinbase recently announced the open-sourcing of tools for transaction signing and secure key protection techniques, along with technical documentation to assist developers in integrating MPC into their systems.
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