The first quarter of 2025 was a verification of reality for digital assets. While the year started with optimism fueled by the election of an American president Pro-Crypto and the expectations of a more user-friendly regulatory environment, macroeconomic challenges quickly dominated the story. Bitcoin has briefly reached a new summit of all time of $ 109,356 before finishing the quarter down 11.6%, its second quarterly decrease since the second quarter of 2022. Altcoins in worse, with more strongly weighted indices to smaller tokens, such as the same index Coindesk (CDMEME) and Coindesk 80 (CD80) 55.2% and 46.4%, respectively.
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Under the surface, a more fundamental change is played out. The gap between bitcoin and the rest of the market continues to expand, largely driven by institutional behavior. As indicated in our latest quarterly report of digital assets, institutions play an increasingly decisive role in the training of capital flows, preferring liquid and regulated assets with large capitalization. This change pushes the digital asset market to more structured strategies and focused on references.
One of the clearest signs of this realignment comes from the domination of Bitcoin, which expresses the total market capitalization of Bitcoin as a percentage of market capitalization for all combined cryptocurrencies. This figure increased to 62.2% in the first quarter, its highest level since February 2021. In particular, this increase occurred despite a drop of 26.9% of the total Bitcoin market capitalization from its peak in January. Our last painting of the week highlights this trend, showing how capital has turned speculative assets and in bitcoin as macro-valatility and mounted geopolitical uncertainty.
The Coindesk 20 index (CD20) has become a useful objective to follow this institutional change. Although the index dropped 23.2% in the first quarter, it considerably surpassed most major digital assets. XRP was the only constituent of the CD20 to display a positive yield, increasing by 0.4% during the quarter, fired by the rejection of the dry affair against Ripple, as well as strong growth in its stablecoin rlusd. RUSD’s market capitalization jumped 323% in the first quarter to $ 245 million, while cumulative negotiation volumes exceeded $ 10 billion in just over three months.
On the other hand, ether fell by 45.3% – underperform most of the main assets in the middle of the continuous migration of user activity to layer 2 and a lack of positive catalysts. US SPOT ETH ETF experienced net outings of $ 228 million in the first quarter, compared to net entries of more than a billion dollars for Bitcoin ETF. The ETH / BTC ratio has dropped to 0.022, its lowest level since May 2020, strengthening the change of domination relating to this cycle.
The broader role of Bitcoin as a macro has also continued to gain ground. In addition to solid FNB flows, public companies added nearly 100,000 BTC to their assets in the first quarter, which represents an increase of 34.7%. This brought the total of these companies to 689,059 BTC – equivalent to more than 56.4 billion dollars at current prices. The launch of the American Bitcoin Strategic Reserve, as well as the introduction of a larger digital asset stock by the Treasury, underlined the growing legitimacy of Bitcoin within American policy.
Looking in the second quarter, the tone on the markets improved following the recent break in new tariff measures. Risk assets have responded favorably and Altcoin ETF optimism remains high. Nearly 40 ETF spots for altcoins were submitted in the first quarter, led by those of Solana and XRP, which each had eight files. The other active ingredients apply to punctual ETFs included Litecoin, Doguecoin and Polkadot. With Solana Futures Vive now on the CME, the previous one in the exposure to Altcoin of institutional quality continues to build.
The first quarter recalled that digital assets no longer move in isolation. As the macro-conditions evolve and the policy changes begin to reshape the regulatory environment, capital is consolidated in assets with deeper liquidity, stronger accounts and institutional relevance. The growing domination of Bitcoin, changing FNB flows and the fragmentation of Altcoin performance all indicate a market recalibrating around structural factors rather than feeling alone.
For a deeper dive in these dynamics, including the complete index performance and the constitutive information, you can access Quarterly report of digital assets here.
