The steep decline in crypto valuations and a breakdown of key technical indicators may signal the start of a new bear market for digital assets, according to a new report from Coinbase.
In its April Monthly Outlook report, the crypto exchange warned that market signals are increasingly pointing to what many in the industry call a “crypto winter,” a prolonged downturn marked by falling prices, reduced liquidity, and waning investor enthusiasm.
The total crypto market cap, excluding Bitcoin (BTC), has plunged 41% since reaching a peak of $1.6 trillion in December 2024. As of mid-April, it now sits at $950 billion, below levels seen for most of 2022.
The drop coincides with a sharp pullback in venture capital investment, which remains down 50–60% from its 2021–2022 highs despite a modest recovery in early 2025.
Combined with broader macroeconomic challenges, including global tariffs, fiscal tightening, and slumping equities, the outlook for crypto in the near term remains fragile, the report said.
Technical analysis
According to David Duong, Global Head of Research at Coinbase, recent declines in Bitcoin and the COIN50 Index, the latter representing the 50 largest non-Bitcoin cryptocurrencies, are not just routine volatility.
Both have broken below their 200-day moving averages, a widely recognized technical indicator used to gauge long-term market momentum. Duong wrote:
“This move below the 200DMA suggests we are entering a bearish cycle. While bitcoin has declined less than 20% from its recent high, the broader altcoin market has experienced much sharper losses, underlining the increased risk and volatility further down the crypto risk curve.”
The report argued that traditional definitions of bull and bear markets, such as the 20% threshold commonly used in equity markets, are too simplistic for the crypto space. With digital assets often swinging 20% or more within days, alternative metrics are needed to assess true market conditions.
The firm favors two measures in particular: risk-adjusted performance using standard deviations (or z-scores), and the 200DMA trend. These tools offer a more nuanced view, reflecting not just price drops but also momentum shifts and changes in investor psychology.
The analysis showed that Bitcoin’s recent decline represents a 1.4 standard deviation move below its historical norm, comparable to the magnitude of stock market corrections in past bear markets.
At the same time, the COIN50 Index has been in bear territory since late February, reinforcing concerns about the health of the broader crypto ecosystem.
Cautious outlook
While Coinbase is advising a defensive stance in the short term, particularly over the next four to six weeks, it remains cautiously optimistic about the second half of 2025.
The report suggested that the market may find a bottom by the end of the second quarter, potentially paving the way for a stronger third-quarter recovery.
Duong noted:
“Sentiment can change quickly in crypto once macro pressures ease. But right now, the environment calls for discipline and selectivity.”
The report also emphasized the growing complexity of the crypto market, arguing that Bitcoin can no longer serve as a simple proxy for the entire space.
As sectors like DeFi, infrastructure tokens (DePIN), and AI-driven agents expand, the divergence in performance and risk is becoming more pronounced.
According to the report:
“As bitcoin matures into a store-of-value asset, understanding the broader market requires more granular tools. The days of treating the crypto market as a monolith are over.”
Despite the challenges, Coinbase believes the long-term fundamentals for crypto remain intact. However, until macroeconomic conditions stabilize and capital begins flowing back into the space, volatility and caution are likely to dominate.
