Author: Bitfinex Alpha

Translated by: Tim, PANews

Bitcoin's performance in the first quarter of 2025 recorded the worst results in nearly a decade. Despite the price soaring to a historic high of $109,590 at the beginning of the year, the quarter ended with a nearly 11% decline. The market's initial optimism regarding Trump's potential victory and pro-cryptocurrency policies quickly transformed into a textbook "sell the news" scenario as substantial regulatory reforms failed to materialize. Since the historical peak, Bitcoin has dropped to a low of $77,041, with a maximum drawdown of nearly 29%, and has since oscillated mainly within the trading range of $78,000 to $88,000.

However, the market structure remains favorable for Bitcoin. Although the total market capitalization of cryptocurrencies has significantly declined, Bitcoin's dominance has risen to over 61%, indicating that funds are rotating from higher-risk altcoins to Bitcoin in an environment of increasing macro uncertainty. Altcoins like Ethereum and Solana have dropped 35%-50% from their cyclical highs, further reinforcing Bitcoin's position as the "reserve asset" of the crypto market.

As the second quarter begins, market price trends remain highly dependent on macroeconomic signals. The direction of Federal Reserve policy and ETF fund flows will continue to dominate market trends. Although signs of panic selling among investors have eased, in a persistently tightening liquidity environment, the market will still need to wait for sufficiently influential catalyst events to form a trend-breaking movement.

From a macroeconomic perspective, certain areas of the U.S. economy are showing resilience, such as a narrowing trade deficit and increased durable goods spending, but these bright spots are overshadowed by deeper structural concerns. Inflation has accelerated beyond expectations due to factors such as new tariff policies raising import costs. In February, the core inflation rate rose by 0.4% month-on-month, marking the largest monthly increase in over a year, while consumer expectations indicate that inflation may remain elevated for an extended period.

Personal disposable income, spending, and savings

Meanwhile, economic growth is slowing. Real income growth remains weak after excluding government spending, and spending in the services sector, a key economic driver, has begun to shrink. Consumer confidence continues to decline, with the Conference Board's Consumer Confidence Index falling to a two-year low, and more Americans expect the unemployment rate to rise. These trends indicate that households' cautious sentiment is intensifying, as evidenced by a continuous rise in personal savings rates.

Trade policy remains a core pressure point. Recent tariff increases and market expectations of further measures in April and May are prompting businesses and consumers to adjust their behavior, including pre-purchasing, delaying investments, or reducing hiring. Although the trade deficit narrowed in February, this data follows a surge in imports in January, which may have already been factored into GDP forecasts. As a result, first-quarter economic growth is expected to slow significantly.

Despite the ongoing economic uncertainty, the crypto industry continues to benefit from a friendly political environment, with the Trump administration pushing for a clearer regulatory framework, and institutional participation enthusiasm is also on the rise.

The U.S. Securities and Exchange Commission has officially withdrawn its lawsuits against three major industry participants: Kraken, Consensys, and Cumberland DRW. This move marks a shift from the agency's previous hardline enforcement stance to a more collaborative regulatory approach. It also signals that regulators are committed to establishing a clear and constructive rule system for the cryptocurrency industry.

To further advance crypto regulation, the SEC's Crypto Assets Working Group announced it will hold four thematic roundtable discussions from April to June 2025. These meetings will focus on core topics such as crypto trading regulation, digital asset custody, tokenization, and the future development of decentralized finance, inviting various industry stakeholders to participate in discussions. The events will be open to the public, reflecting the SEC's regulatory direction of promoting open dialogue and enhancing transparency in the formulation of cryptocurrency policies.

Meanwhile, Trump Media & Technology Group announced a partnership with cryptocurrency exchange Crypto.com to launch a series of exchange-traded funds (ETFs) focused on cryptocurrencies. This move marks the group's official entry into the financial products sector, aiming to meet the growing market demand for digital asset investment tools. Although the plan still requires regulatory approval, if successful, it will significantly enhance the visibility of Trump Media & Technology Group and Crypto.com in the traditional financial sector.

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