Coinbase Research has recently issued a warning about a potential crypto winter looming on the horizon. The combination of technical breakdowns, declining investor sentiment, and macroeconomic pressure could signal a harsh downturn similar to the one that affected digital assets between late 2021 and early 2023.
David Duong, head of institutional research at Coinbase, highlighted several key indicators that are currently flashing red. Both Bitcoin and the Coinbase COIN50 index have dipped below their 200-day moving averages, a crucial threshold that many traders use to distinguish between bullish and bearish trends.
The altcoin market has also been feeling the pressure, with a sharp decline in market capitalization excluding Bitcoin. The total crypto market cap has plummeted to $950 billion, down 41% from its peak of $1.6 trillion in December 2024. This valuation is even lower than what was observed during most of the period between August 2021 and April 2022.
Additionally, venture capital investment in the crypto space has failed to rebound significantly, remaining 50 to 60 percent below the highs seen during the previous bull cycle of 2021-2022.
Coinbase attributes these declines to macroeconomic challenges such as global tariff escalation and prolonged fiscal tightening. These factors have dampened investor risk appetite, leading to a freeze in capital flows into altcoins and early-stage blockchain projects. The investment environment has been described as “paralysed,” with both traditional and digital assets facing downward pressure.
Despite the gloomy outlook, Coinbase remains cautiously optimistic about the future. They recommend adopting a defensive stance on risk for the time being, with a potential market floor expected to materialize between mid-to-late Q2 of 2025. This could pave the way for a recovery in the latter half of the year.
While the current market conditions bear similarities to the 2022 crash that wiped out trillions in value, Coinbase believes that a rebound may be on the horizon once external pressures ease. The research team emphasizes the importance of a tactical approach, as sentiment in the market could shift rapidly.
In conclusion, while the term “crypto winter” is not used lightly, Coinbase believes that a more constructive second half of 2025 could be in store once sentiment resets. Investors are advised to proceed with caution and stay alert to potential market shifts.