The crypto market is facing serious challenges indicating a potential new downturn, referred to as 'crypto winter'. Coinbase Institutional shares concerning data about the current situation.
Altcoin Market Drops Sharply
According to David Duong, Head of Research at Coinbase Institutional, the total crypto market cap, excluding Bitcoin, has fallen to $950 billion. This is a 41% drop from its peak of $1.6 trillion in December 2024, and 17% lower than the same time last year. Duong noted that this drop is even worse than most declines between August 2021 and April 2022. While altcoins have dropped significantly, Bitcoin has only fallen by less than 20%, making it more stable compared to other cryptocurrencies.
Impact of Price Swings
Duong pointed out that a 20% change in the stock market often signals a new trend; however, crypto prices can move more than 20% without real changes in market conditions. He suggested using tools like risk-adjusted performance and the 200-day moving average (200DMA) for better market understanding. The 200DMA is useful for spotting market trends: if prices stay above the 200DMA, the market is strong; if they stay below it, the market is weak.
Tariff Fears Add More Pressure
Crypto prices are also falling due to concerns over global trade policies. President Donald Trump recently mentioned the possibility of new tariffs, which has made investors nervous. These global issues, higher interest rates, and declining stock prices are making it harder for individuals to invest in risky assets like crypto. However, Duong believes prices may find support around the middle or end of the second quarter of 2025, and if investor confidence improves, crypto could start to recover in the third quarter.
The crypto market, facing various threats, is currently undergoing challenging times. However, there are signs of potential improvement if investor trust is restored in the future.
