Crypto Market Outlook 2025: Sentiment, Trends & Key Metrics

Multiple indicators suggest the beginning of another “crypto winter,” driven by sharp negative sentiment following the introduction of global tariffs and the risk of further escalation.

The total crypto market capitalization, excluding bitcoin (Total 3), stands at $950 bn, marking a 41% drop from its December 2024 peak of $1.6 tn and 17% below the level recorded during the same period last year. In 22 April, 2025, Total 3 capitalization decline up to $790 bn

This value is lower than nearly the entire span from August 2021 through April 2022, according to Coinbase report. Beinsure analyzed the report and highlighted the key points.

A key highlights from the analysis

• The total crypto market capitalization (excluding bitcoin) a 41% drop from its December 2024 peak of $1.6tn, signaling significant market stress.
• Crypto venture capital funding rose in Q1 2025 from the prior quarter but remains 50-60% below the 2021-22 cycle peak, limiting new capital inflows, especially for altcoins.
• Both bitcoin and the COIN50 index have fallen below their 200-day moving averages, suggesting potential long-term bearish trends across the broader crypto market.
• Between November 2021 and November 2022, bitcoin’s 76% price drop and the S&P 500’s 22% decline align closely in risk-adjusted terms, highlighting similar stress levels.
• Despite current pressures, including macroeconomic uncertainty and reduced liquidity, market sentiment may recover quickly, with a more positive outlook anticipated in the second half of 2025.

Bitcoin’s role as a “store of value”

As bitcoin’s role as a “store of value” continues to grow, we think a holistic evaluation of crypto’s aggregate market activity will be needed to better define bull and bear markets for the asset class, particularly as we’re likely to see increasingly diverse behavior in its expanding sectors.

Both BTC and the COIN50 index have recently broken below their respective 200DMAs, which signals potential bearish long-term trends in the overall market.

According to Coinbase data, venture capital investment in crypto increased in the first quarter of 2025 compared to the previous quarter, but remains 50-60% below the peak levels seen during the 2021-22 cycle.

This limits the inflow of new capital into the sector, especially for altcoins. These pressures reflect broader macroeconomic uncertainty, where traditional risk assets face consistent challenges from fiscal tightening and tariff measures. This has delayed investment decisions across markets.

With equities under pressure, crypto’s recovery remains difficult despite some regulatory developments providing support.

These combined factors present a weak cyclical outlook for digital assets, which may continue for at least the next 4-6 weeks.

However, investors should approach markets tactically, as sentiment shifts tend to occur quickly. A more favorable environment is expected in the second half of 2025.

Bull vs Bear crypto markets

In equity markets, a move of 20% or more from a recent high or low often defines bull or bear markets. This threshold, though widely referenced, does not apply well to crypto markets, which frequently see 20% price swings over short periods without signaling a clear shift in market trends.

Historical patterns show that bitcoin can fall 20% within a week and still remain within an overall upward trend, or the reverse.

Crypto’s continuous trading also means it serves as a barometer for broader risk sentiment during hours when traditional markets are closed, such as evenings and weekends. This can intensify crypto’s response to global events.

For example, US equities, represented by the S&P 500, fell 22% between January and November 2022 during the Federal Reserve’s aggressive rate hikes. Bitcoin, which began declining earlier in November 2021, fell by 76% over a comparable period—about 3.5 times the equity market’s decline.

Truth in contradictions

The traditional 20% threshold for defining bull and bear markets in equities lacks a consistent or formal definition. Identifying market conditions often depends more on observation and experience than strict rules, similar to Supreme Court Justice Potter Stewart’s remark on obscenity: “I know it when I see it.”

Bull and bear US equity markets identified by the “20% rule”

Still, in an effort to formalize this measure, we analyze the market highs and lows for the S&P 500 within a rolling one-year window of closing prices to pinpoint major reversals.

Yet, this threshold overlooks at least two significant 10-20% drawdowns that dramatically impacted market sentiment over the last ten years, such as the volatility spikes in late 2015 and 2018.

The sharpest drop in market sentiment

Past observations show that declines driven by sentiment often lead investors to adjust portfolios defensively, even when the drop does not reach the commonly cited 20% threshold.

Bear markets, in this view, reflect broader shifts in market conditions—marked by weakening fundamentals and reduced liquidity—rather than being defined solely by percentage movements.

Relying on the “20% rule” can create a false sense of security, as it overlooks early indicators such as declining market depth and shifts toward defensive sectors. These signals have historically appeared ahead of larger market downturns.

Alternative crypto market metrics

Given these limitations, alternative metrics offer a clearer view of how price movements and investor sentiment interact across stocks and crypto.

Bear markets reflect sentiment shifts as much as they reflect returns, since sentiment often shapes the persistence of performance declines that investors seek to avoid.

This remains a difficult area to assess because longer-term trend reversals do not always require extended periods of rising or falling prices. The COVID-19 pandemic provides an example of a rapid downturn followed by a sharp recovery.

Bitcoin’s risk-adjusted performance

That bear market’s short duration resulted from the scale of fiscal and monetary interventions by global authorities, which prevented a prolonged drawdown.

Instead of relying on basic thresholds, metrics such as

1. risk-adjusted performance measured by standard deviation
2. the 200-day moving average (200d MA), offer better insight into market trends for both equities and crypto.

For instance, between November 2021 and November 2022, bitcoin declined by 1.4 standard deviations relative to its average performance over the prior 365 days.

Over the same period, equities declined by 1.3 standard deviations. This shows that bitcoin’s 76% price drop and the S&P 500’s 22% decline align more closely when viewed through a risk-adjusted lens.

Because this metric naturally accounts for crypto’s larger volatility, this makes z-scores particularly well-suited for crypto markets, though it’s not without its drawbacks.

Not only is it somewhat more difficult to calculate, but this metric tends to generate fewer signals in stable markets and may not react as quickly to changes in the broader trend.

Bull & Bear cycles in BTC markets by the z-scores

The 200-day moving average (200DMA) offers a straightforward and effective method for identifying sustained market trends. With a minimum requirement of 200 days of data, this measure smooths short-term fluctuations and adjusts to recent price movements, presenting a clearer view of market momentum.

The guidelines are direct:

• A bull market occurs when prices consistently remain above the 200DMA with upward momentum.
• A bear market occurs when prices persistently stay below the 200DMA with downward momentum.

This method aligns with broader trend indicators found in both the “20% rule” and risk-adjusted (z-score) models. It also improves the accuracy needed to generate practical insights in changing market environments.

Bull & Bear cycles in BTC markets by the 200DMA

For example, in addition to capturing the sell-offs witnessed during the pandemic (early 2020) and Fed rate hiking cycle (2022-2023), it captured the 2018-19 crypto winter and the decline in mid-2021 due to the ban of cryptocurrency mining in China.

We find that it better maps to the large increases and decreases in investor sentiment over various periods.

Although bitcoin is often used as a proxy of overall crypto performance, using it as the benchmark for gauging crypto market trends is becoming less and less practical as the asset class expands into new sectors (e.g. memecoins, DeFi, DePIN, AI agents, etc).

We think this warrants taking a defensive stance on risk for the time being, though we still believe that crypto prices may be able to find their floor in mid-to-late 2Q25 – setting up a better 3Q25.

For now, the challenges of the current macro environment require greater caution.

FAQ

…………………………..

AUTHOR: David Duong, CFA – Head of Coinbase Research, Edited by Peter Sonner — Crypto & Tech Editor at Beinsure Media

_{Disclaimer: The material is provided for informational purposes. Trading in financial markets involves significant risk and is not suitable for every investor. The possibility exists that you could sustain a loss of some or all of your initial investment. Therefore, you should not invest money that you cannot afford to lose. Before deciding to trade, you should carefully consider your investment objectives, level of experience, and risk appetite. The high degree of leverage can work against you as well as for you. All trading strategies are used at your own risk}