Crypto Prices Have Entered a Bear Market Phase

A new report from Coinbase Institutional suggests the crypto prices have entered a bear market phase. Potential recovery is not expected until mid-to-late Q2 2025.

A new report by Coinbase Institutional suggests that crypto prices have entered a bear market phase, with potential recovery not fully expected until mid-to-late Q2 2025.

The April 15 report titled “How Do You Define a Crypto Bear Market?” notes that both Bitcoin (BTC) and the COIN50 index have recently broken below their respective 200-day moving averages (200DMA), signaling bearish long-term trends in the overall market.

Both Bitcoin and the broader cryptocurrency market are showing strong signals of a bear market according to Coinbase’s analysis of key technical indicators.

The report examines multiple methods for identifying market cycles, including the 200-day moving average (200DMA), Bollinger Bands, and the Relative Strength Index (RSI).

They concluded that the 200DMA provides the most reliable framework for identifying sustained market trends, especially in the present market regime.

The analysis reveals that Bitcoin’s recent steep decline, amounting to a 50% drop from November 2021 highs, qualifies as a bear market cycle starting in late March, based on the 200DMA model.

However, the broader crypto market, as measured by the COIN50 index (which includes the top 50 tokens by market capitalization), has been “unequivocally trading in bear market territory since the end of February.”

This disparity is seen in market performance data. The total crypto market cap (excluding Bitcoin) fell 41% from December highs, compared to a less than 20% decline in Bitcoin over the same period.

The report notes this difference “underscores the higher volatility and risk premium inherent to altcoins further down the risk curve.”

Coinbase’s approach challenges the traditional equity market definition of a bear market as a 20% decline from recent highs.

The report argues this threshold is “somewhat arbitrary and certainly less applicable to crypto markets, which routinely experience 20% price swings in short periods that don’t necessarily signal true changes in the market regime.”

Macro Environment Creates Challenges for Crypto

The current bearish trend in crypto markets is being driven by broader macroeconomic factors according to Coinbase’s analysis.

The report points to extreme negative sentiment that has developed “due to the onset of global tariffs and the potential for further escalations” as key contributors to the market downturn.

These tensions in the underlying structure occur from uncertainty in the wider economic environment, as traditional risk assets have been under chronic pressure from fiscal budget cuts and trade policies.

This has created what the report terms “paralysis in investment decision making” that affects traditional and crypto markets.

With equities being under stress, the journey of recovery for cryptocurrencies remains difficult despite some positive trends on the regulatory side.

The report states that during down times in traditional markets, crypto suffers amplified effects due to its 24/7 trading nature and its proclivity to act as a proxy for general risk sentiment during times when traditional markets are not open.

Venture capital investment is also an indicator of market health. VC investment in crypto did increase in Q1 2025 from the last quarter.

However, it is still 50-60% below levels during the 2021-22 cycle peak. This decline “substantially constrains the onboarding of new capital into the ecosystem, especially on the altcoin side,” the report says.

The analysis shows that previous crypto plunges have been more connected to issues in the traditional markets than we realize.

For example, US stocks fell 22% during the Federal Reserve interest rate hikes from January to November 2022. Bitcoin fell 76% over the same period – which is nearly 3.5 times stocks.

Crypto Price to Recover in Latter Half of 2025

While the present bearish signals, the prognosis for Coinbase is not all doom and gloom for crypto investors.

The report suggests that while caution is advised in the short term, there could be light at the end of the tunnel by mid-to-late Q2 2025, potentially setting up a better 3Q25.

Investors are advised to take a short-term approach when it comes to the markets during the time of uncertainty.

Experts at Coinbase are sure that when the sentiment finally resets, it’s likely to occur fairly rapidly, leaving space for shrewd investors to gain.

This forecast is consistent with the pattern in the history of cryptocurrency markets. Recovery phases have been happening with more velocity than in traditional markets.

According to the report, although the current defensive position is justified, the team remains constructive for the second half of 2025.