The cryptocurrency markets show several convergent signs of weakness, suggesting a potential appearance of another “crypto winter”, according to a recent institutional corner report.
Despite a brief recovery in prices in Bitcoin, wider indicators flash on caution due to sustained macroeconomic uncertainty and the decrease in capital influx in the sector.
Retourf of venture capital and changing metrics
David Duong, research manager in Coinbase Institutional, described the current market in a note published on Tuesday. He pointed out that the total market capitalization of cryptography, excluding bitcoin, decreased by more than 41% since it culminates at 1.6 dollars in December 2024, now at around 950 billion dollars.
This figure is also down 17% compared to the same era last year and even lower than the levels recorded between August 2021 and April 2022. Meanwhile, Bitcoin showed a relative force with a drop of 20% smaller in the same period of time, increasing its domination of the market.
Duong underlined the current retirement of venture capital investments in the crypto, which, despite a slight increase in the first quarter, remains from 50% to 60% below the cutting-edge levels of the 2021-2022 cycle. This decrease has limited the introduction of new liquidity, in particular for altcoins, thus amplifying concerns about the wider market health.
Instead of relying only on price oscillations – often misleading in crypto due to the inherent volatility – Duong suggests using measures adjusted to risk and long -term mobile averages for a more precise trend analysis.
For example, during the last major correction from November 2021 to November 2022, Bitcoin decreased by 1.4 standard deviations below its historical average, a decision comparable to a drop in the type of 1.3 in shares during the same period.
Duong has noted that if these Z score measures are informative, they tend to be lagging behind in stable markets and may not quickly capture changes in the feeling of investors. In addition, Coinbase Institutional monitors the 200 -day mobile average (200DMA) to identify supported trends in bulls or bear.
According to this model, the fall of Bitcoin below its 200DMA in March indicates a lower turn, while the Coin50 index, which follows the 50 best cryptographic assets by market capitalization, has been in Bear territory since February.
Pressure market structure but potential stabilization to come
The report also highlighted the systemic pressures caused by high interest rates, commercial prices and macroeconomic uncertainties in progress. These factors weighed heavily on traditional risk assets and, by extension, digital assets.
Duong noted that despite positive regulatory developments in the United States, such as an increase in institutional adoption and current legislation, these tail winds have not yet reversed the broader negative trend. However, the institutional perspectives of Coinbase are not entirely dark.
Duong said that even if investors should maintain a defensive posture for the moment, the feeling of the market could stabilize in the middle of the T2 of the end, potentially preparing the path for a resumption in the third quarter 2025. He stressed that when a reset of the market occurs, it often does it quickly, which makes it important so that long -term investors remain prepared.
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