The crypto market may be entering a prolonged downturn, with both Bitcoin and the broader COIN50 Index slipping below key long-term indicators, signaling the potential start of a bear market. According to Coinbase Institutional, recent price action suggests a structural shift in market momentum—one that goes beyond simple percentage corrections and reflects deeper changes in investor sentiment and liquidity conditions.
The 200-Day Moving Average: A Key Signal of Market Regime Change
A pivotal metric in assessing long-term market trends is the 200-day simple moving average (SMA). Historically, when an asset trades below this level, it indicates weakening momentum and a bearish outlook. Bitcoin crossed below its 200-day SMA on March 9, 2025, and has remained beneath it since—a development that Coinbase Institutional interprets as the beginning of a new bear cycle.
However, the broader market appears to have turned even earlier. The COIN50 Index, which tracks the top 50 cryptocurrencies by market capitalization, has been trading below its 200-day SMA since late February 2025. This suggests that while Bitcoin’s decline was significant, the overall crypto ecosystem had already entered bearish territory weeks prior.
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Why Traditional Bear Market Definitions Fall Short in Crypto
In traditional financial markets, a bear market is typically defined as a 20% or more decline from recent highs. However, in the highly volatile world of cryptocurrency, such thresholds are often misleading. As David Duong, Global Head of Research at Coinbase Institutional, points out, crypto markets regularly experience corrections exceeding 20%, yet not all of them reflect true structural downturns.
“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.”
This nuanced view emphasizes that bear markets should be understood not just by price drops, but by underlying shifts in market behavior, funding activity, and risk appetite.
Beyond Price: Measuring Risk-Adjusted Performance with Z-Score
To better capture these shifts, Coinbase Institutional employs a z-score model that measures Bitcoin’s current performance relative to its average returns over the past 365 days, adjusted for volatility. This risk-adjusted approach helps identify whether price movements are outliers within historical norms.
According to the report, the z-score model indicated that the last bull cycle ended in late February 2025. Since then, market conditions have been classified as “neutral,” suggesting reduced momentum but not yet extreme fear or capitulation.
While useful, the z-score model does have limitations—particularly its lag during rapid market changes. This underscores the need for a multi-metric approach when evaluating market cycles.
Venture Capital Slowdown Adds Pressure to Altcoins
One of the most concerning developments for the broader crypto ecosystem is the continued slowdown in venture capital (VC) funding. Despite Bitcoin reaching new all-time highs earlier in 2025—surpassing $70,000 and outperforming its 2021 peak—this bullish momentum did not translate into renewed risk appetite among institutional investors.
VC funding for crypto projects remains 50% to 60% below the levels seen during the 2021–2022 boom. This lack of capital inflow could hinder innovation and development across decentralized finance (DeFi), Web3 infrastructure, and Layer 1 platforms—sectors heavily reliant on external funding.
Altcoins, which often thrive during periods of speculative enthusiasm and abundant capital, may face increased pressure in this environment. With fewer new projects launching and existing ones struggling to secure follow-on financing, investor focus could remain concentrated on Bitcoin and other large-cap digital assets.
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What Lies Ahead? A Possible Floor in Mid-to-Late Q2 2025
Despite the growing signs of a bear market, Coinbase Institutional remains cautiously optimistic about a potential recovery later in the year. Duong suggested that the market may find a floor during mid-to-late Q2 2025, setting the stage for a stronger second half.
Such a scenario would align with historical crypto cycles, where extended consolidation phases are often followed by renewed upward momentum—especially if macroeconomic conditions improve or regulatory clarity increases.
Still, investors should prepare for continued volatility and limited upside in the near term. A defensive posture—emphasizing risk management, portfolio diversification, and selective exposure—is advisable until clearer bullish signals emerge.
Core Keywords:
- Bitcoin bear market
- COIN50 Index
- 200-day moving average
- Crypto market cycle
- Z-score model
- Venture capital crypto funding
- Market regime shift
- Risk-adjusted performance
Frequently Asked Questions (FAQ)
Q: What is the significance of the 200-day moving average in crypto markets?
A: The 200-day SMA is a widely watched indicator of long-term trend direction. When an asset trades below this level, it signals weakening momentum and is often interpreted as the start of a bear market.
Q: How is a crypto bear market different from a stock market bear market?
A: In traditional markets, a 20% drop defines a bear market. In crypto, such declines are common and don’t always reflect structural downturns. Instead, crypto bear markets are better understood through shifts in liquidity, investor sentiment, and funding trends.
Q: What is the COIN50 Index?
A: The COIN50 Index tracks the performance of the top 50 cryptocurrencies by market capitalization, offering a broader view of market health beyond just Bitcoin.
Q: Why is venture capital funding important for altcoins?
A: VC funding drives innovation and growth in emerging blockchain projects. Reduced investment can slow development, reduce marketing efforts, and decrease investor interest in smaller tokens.
Q: Can Bitcoin be in a bull market while altcoins are in a bear market?
A: Yes. Bitcoin often leads rallies and shows resilience during downturns. Altcoins typically underperform in low-liquidity environments, creating divergent performance trends.
Q: What does “risk-adjusted performance” mean in crypto analysis?
A: It refers to measuring returns relative to volatility. The z-score model used by Coinbase Institutional evaluates how extreme current price movements are compared to historical norms.
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