The 41% decline in the total cryptocurrency market capitalization, excluding bitcoin, from its December 2024 peak of $1.6 trillion to $950 billion by mid-April 2025 may signal the start of another crypto winter, the latest Coinbase Research report states. Besides being 17% lower than in the same period last year, the market capitalization of the cryptocurrency market excluding bitcoin is even lower than in the period from August 2021 to April 2022, when it similarly declined.

In addition to the steep drop in the combined digital assets, less bitcoin, venture capital funding in crypto during the same period is still down 50% to 60% from the levels observed during the peak of the 2021-22 cycle. This reduced funding, the Coinbase report argues, has a bearing on the amount of capital that eventually finds its way into the cryptocurrency ecosystem.

According to the report, venture capital funding in crypto is down because decision-makers are having a hard time trying to determine where the global economy is headed.

“All of these structural pressures stem from the uncertainty of the broader macro environment, where traditional risk assets have faced sustained headwinds from fiscal tightening and tariff policies, contributing to the paralysis in investment decision making. With equities struggling, the path to recovery for crypto remains challenging even with the idiosyncratic tailwinds from the regulatory environment,” the report states.

The report argues that the way these factors impact each other indicates a difficult cyclical outlook for the digital asset space, which in turn justifies the prolonged cautionary approach, at least in the short term.

Besides these factors, the report points to the COIN50 index, which includes the top 50 tokens by market capitalization, indicating the asset class as a whole has been in bear market territory since the end of February. The report asserts that this is consistent with the 41% drop in the capitalization less that of bitcoin from its December 2024 high to $950 billion. The disparity underscores the higher volatility and risk premium inherent to altcoins further down the risk curve.

To users and cryptocurrency investors looking for clues on what the next few months hold, the Coinbase team urges increased caution.

“Thus, we think this warrants taking a defensive stance on risk for the time being, though we still believe that crypto prices may be able to find their floor in mid-to-late 2Q25 – setting up a better 3Q25. For now, the challenges of the current macro environment require greater caution,” the report concludes.

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