- Bitcoin has fallen over 20% since its January record.
- Coinbase says that’s one sign that crypto is now in a bear market.
A bear market is upon us.
Well, at least if you look at crypto markets through traditional tools, David Duong, Coinbase’s global head of research, argued in a Wednesday blog post.
The 200-Day Moving Average model on Bitcoin “signals potential bearish long-term trends in the overall market,” Duong wrote, referring to a metric that measures the previous 200 days of closing prices and averages them out as a way to filter out short-term noise and fluctuations and underscore long-term trends.
The post comes three months after Donald Trump was inaugurated as the 47th president of the United States.
Crypto market watchers anticipated that his second term in office would trigger a bull market thanks to his pro-industry platform. The inauguration coincided with Bitcoin’s record $108,786 price.
While Trump has launched several initiatives to relax crypto regulation in the US, uncertainties around his trade policies has thrown the world economy into chaos and seen Bitcoin fall over 20% since January 20.
To Duong, that plunge is a key indicator that, rather than a bull market, crypto has entered a bear one.
But he notes that there are more reasons for us to have potentially entered a crypto winter.
New definitions
Recognising a bear market in crypto can be tricky.
In equities markets, analysts rely on the rule of thumb that assets are seen as having entered bear market territory when the price of it drops 20% from its recent market high.
The problem is that both Bitcoin and altcoin regularly swing more than 20% in either direction.
Doug argued that the 20% rule is not the only metric to consider.
Analysts should also look for “early warning signs” such as investors fleeing risk assets for safer harbours like gold.
“The total crypto market cap excluding Bitcoin now stands at $950 billion, a steep 41% decline from its December 2024 high of $1.6 trillion and 17% below levels from the same period last year,” Doug wrote.
Another indicator of a crypto winter? Venture capital is also “down 50-60% from the levels observed during the peak of the 2021-22 cycle,” Duong wrote.
“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,” Duong wrote.
Stopping short of saying that the crypto winter has started — although, Duong does say that the 200-Day Moving Average model puts the start of a bear market in early March — the Coinbase researcher warned that a more “defensive stance on risk” is needed for the time being.
Even so, Duong suggested that the market may recover by the third quarter of 2025, “may” being the operative word.
“For now, the challenges of the current macro environment require greater caution,” he said.
Andrew Flanagan is a markets correspondent for DL News. Have a tip? Reach out to aflanagan@dlnews.com.
