Crypto winter at the door? Analysis of the second quarter 2025

The first quarter of 2025 ended with a dramatic turn for the cryptocurrency market, and for this reason, many believe it is a new crypto winter.

If the beginning of the year seemed to promise new records, today investors and analysts are questioning the possibility of a global recession that could fuel a new winter. 

This is what emerges from the recent report “Charting Crypto” created by Coinbase Institutional in collaboration with Glassnode, which offers a comprehensive overview of the state of the sector.

The slowdown of the markets: start of a new crypto winter?

After an explosive December 2024 — with the crypto market (excluding Bitcoin) reaching a capitalization of 1.6 trillion dollars — the first quarter of 2025 saw a 41% crash, bringing the value to about 950 billion dollars. In parallel, the flow of venture capital in the sector decreased drastically, returning to the levels of 2017-2018. The combination of macroeconomic uncertainty, global trade tensions, and a more restrictive monetary policy has cast shadows over the entire ecosystem.

According to Coinbase and Glassnode, caution is necessary in the short term, but not all is lost: when market sentiment reverses, the rebound could be swift and vigorous. Expectations for the second half of 2025 remain more optimistic.

The voices of the protagonists: the data that matters

The report also includes analyses of some of the main players in the sector. Here are the highlights:

• Grayscale emphasizes that, despite everything, the fees generated by decentralized applications are on the rise, a sign of robust demand.
• Tephra Digital highlights that many major brokers still limit exposure to Bitcoin ETFs: a policy change could trigger a wave of investments up to 22 times higher than the flows seen in 2024.
• Multicoin Capital celebrates the success of Solana, which in the first quarter generated more revenue than all other Layer 1 and Layer 2 blockchains combined.
• a16z crypto emphasizes the rise of stablecoins, whose transaction volume (adjusted for “inorganic” activities like bots) has reached record levels.

Bitcoin and Ethereum: signals of stress but also of resilience

Bitcoin, the king of cryptocurrencies, has maintained a certain relative strength. Despite having seen its price drop below $90,000, the long-term held BTC liquidity has increased, indicating that many investors are accumulating rather than selling.

However, other indicators tell a more complex story:

• The Net Unrealized Profit/Loss (NUPL) of Bitcoin has dropped to 0.47, marking a shift from the sentiment of “denial” to that of “anxiety” among investors.
• More than 4 million BTC are now at a loss compared to their last transaction price, against less than half a million at the beginning of the year.
• Bitcoin’s dominance over the total market capitalization has risen to 63%, the highest level since 2021.

As for Ethereum, the situation appears even more delicate:

• The price of ETH dropped by 45% in the first quarter.
• The liquid supply of Ether has increased by 15%, indicating a greater willingness to sell.
• Transaction fees have collapsed by 54%, despite the number of transactions remaining stable.
• More than 40 million ETH are now “in perdita”, reflecting the recent difficulties of investors.

ETF Spot and capital flows: a mixed picture

The data on ETF fund flows show a mixed picture:

• The spot Bitcoin ETFs recorded positive flows until early 2025, but with a subsequent slowdown.
• The spot ETFs on Ethereum have had a more volatile performance, without clear signals of directional trend.

Furthermore, the report highlights how the futures and options market has experienced a decline in volumes compared to the post-American electoral highs of 2024, but remains solid in absolute terms.

Correlations and volatility: crypto more isolated

Interesting is also the data on correlations: while the correlation between crypto and US stocks has risen in the first months of the year, compared to other traditional assets (gold, bonds, currencies) crypto have maintained a low or even negative correlation. A signal that, in phases of extreme volatility, Bitcoin and Ethereum could return to behaving as distinctive assets and not simply correlated to traditional markets.

From the point of view of volatility, Bitcoin, Ethereum, and Solana have shown high but not extreme levels, with more pronounced movements especially on Solana.

DeFi and Layer 2: development under the radar

Despite the bear context, the world of decentralized finance (DeFi) continues to show signs of vitality:

• The Total Value Locked (TVL) on Ethereum has reached 48 billion dollars.
• Transactions on Layer 2 like Arbitrum, Optimism, and Base remain robust, while the “Dencun” upgrade has drastically reduced transaction fees, increasing network efficiency.

According to Coinbase and Glassnode, some events could rapidly improve the scenario:

• End of quantitative tightening by the Fed, resulting in an increase in global liquidity.
• Fiscal stimuli from key economies such as the European Union or China.

On the contrary, a worsening of trade tensions or new macroeconomic shocks could further aggravate the crisis.

Conclusions: defensive strategy, but ready to restart

The final advice of the report is clear: adopt a tactical and defensive approach in the short term, but remain ready to act when the sentiment reverses. In a market as volatile and cyclical as the crypto one, opportunities tend to arise suddenly and reward only those who are well-positioned.

The second quarter of 2025 will therefore be crucial to understand if we are truly on the brink of a long crypto winter or if, on the contrary, the ecosystem will be able to surprise once again.