The company points to macro headwinds, declining sentiment, and tighter liquidity as signs of a shifting risk environment
Bitcoin and Coinbase’s COIN50 Index have both fallen below their 200-day moving averages (200DMAs), a key technical threshold that the exchange says may signal a shift toward a bearish market.
The company’s monthly report, published April 15, flagged multiple indicators that point to what it called a “structural bear market” developing across the digital asset space.
Notably, the total crypto market cap excluding Bitcoin has dropped 41% since December 2024, falling to $950 billion, a level not seen since early 2022.
This comes as venture capital funding remains down 50-60% from the 2021 peak, further weakening the altcoin ecosystem.
“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,” Coinbase wrote in the report.
Risk signals multiply as altcoins and sentiment weaken
While Bitcoin is often used as a proxy for broader crypto trends, Coinbase emphasized that its technical breach only partially reflects what’s happening across the sector.
The COIN50 Index, which tracks the top 50 tokens by market cap, has been trading below its 200DMA since February, well ahead of Bitcoin’s March breakdown.
This, along with a collapse in non-Bitcoin market cap, underscores a deeper risk-off shift among crypto investors.
Coinbase analysts challenged the conventional 20% decline rule used in equities to define bear markets, noting that in crypto, such moves are common and often do not signal a true change in regime.
Instead, the report advocates for alternative metrics, such as risk-adjusted performance and long-term moving averages, which better reflect investor sentiment and liquidity trends in volatile environments.
Market structure shifts may delay recovery despite midyear optimism
Coinbase warned that macroeconomic headwinds such as fiscal tightening and global tariff escalations have created a state of “paralysis” across risk assets.
These pressures, coupled with declining liquidity, have stalled investment activity, particularly in altcoins and early-stage blockchain projects.
Despite these short-term challenges, the report noted that sentiment resets in crypto can occur quickly.
Coinbase remains “constructive for the second half of 2025,” citing the potential for a tactical rebound if macro conditions stabilize.
For now, however, the firm recommends a defensive stance and close attention to structural indicators rather than price swings alone.
