The crypto bull run could have ended, with the market poised for a winter characterised by extended losses and stagnation, in line with Coinbase’s institutional arm.
“The 200DMA model on bitcoin does suggest that the token’s recent steep decline qualifies this as a bear market cycle starting in late March. But the same exercise performed on the COIN50 index (which includes the top 50 tokens by market capitalization) shows the asset class as a whole has been unequivocally trading in bear market territory since the end of February,” David Duong, international head of analysis at Coinbase Institutional, stated in a observe printed Monday.
Bitcoin slipped under its 200-day easy transferring common (SMA) on March 9 and has since established a foothold under the identical in an indication of a long-term bearish shift in momentum. The 200-day SMA is broadly tracked to gauge long-term traits, with persistent strikes above the identical, representing a bull market and vice versa.
Duong famous this commentary whereas addressing the challenges of figuring out a crypto bear market, the place 20% or extra corrections are routine. In distinction, a 20% decline is often used to outline bear markets in inventory markets.
The report argued that the arbitrary 20% typically fails to account for a dent in investor sentiment and ensuing portfolio changes spurred by smaller, extra intense sell-offs.
“We’ve seen in the past that sentiment-driven declines can often trigger defensive portfolio adjustments, despite not meeting the arbitrary 20% threshold. In other words, we believe that bear markets fundamentally represent regime shifts in market structure – characterized by deteriorating fundamentals and shrinking liquidity – rather than just their percentage declines,” Duong famous.
Along with the 200-day SMA, Duong highlighted bitcoin’s risk-adjusted efficiency measured in commonplace deviations (z-score) relative to the common efficiency over the earlier three hundred and sixty five days as one other efficient technique for figuring out crypto bear markets.
“Our [z-score] model indicates that the most recent bull cycle ended in late February. But it has since classified all subsequent activity as “impartial,” highlighting its potential lag in rapidly changing market dynamics,” Duong stated, calling for a defensive stance on threat asses in the meanwhile.
The upcoming winter could also be extra brutal for different cryptocurrencies contemplating the slowdown within the enterprise capital (VC) funding.
Whereas BTC set new highs early this yr, effectively above the 2021 prime of $70K, the bullish development didn’t encourage extra threat taking within the VC house, leaving the general funding 50%-60% under 2021-22 ranges.
Duong stated that the crypto market “may find a floor in mid-to-late 2Q25 – setting up a better 3Q25.”
