Crypto winter appears to have begun, with Bitcoin and 50 leading tokens entering bear market territory, according to Coinbase Institutional.
Conventional bear market indicators may not always adequately reflect changes in investor sentiment and market structure in the cryptocurrency space.
Author: Omkar Godbole | Editor: Parikshit Mishra Updated: April 16, 2025, 05:51 PM Published: April 16, 2025, 08:46 AM
Key points:
- According to information from Coinbase Institutional, the crypto market is entering a bearish phase, suggesting significant losses and stagnation.
- Bitcoin's decline below the 200-day simple moving average indicates that crypto winter is approaching.
- Conventional bearish indicators may not fully reflect changes in investor sentiment and market structure in the crypto space.
Coinbase's institutional arm says the crypto rally is likely over and the market is preparing for a winter marked by prolonged losses and stagnation.
“The 200DMA pattern for Bitcoin suggests that the token’s recent sharp decline qualifies it as a bear market cycle that began in late March. However, a similar study for the COIN50 index (comprising the 50 largest tokens by market cap) shows that the asset class as a whole has clearly been in a bear market since late February,” said David Duong, global head of research at Coinbase Institutional, in a report published Monday.
Bitcoin fell below its 200-day simple moving average (SMA) on March 9 and has remained below that mark since then, signaling a long-term bearish change in momentum. The 200-day SMA is widely used to assess long-term trends, with sustained moves above the line signaling a bull market and vice versa.
Duong made this observation when discussing the difficulty of identifying bear markets in cryptocurrencies, where corrections of 20% or more are common. In contrast, a 20% drop is usually an indicator of bear markets in stock markets.
The report points out that the arbitrary 20% often fails to account for deteriorating investor sentiment and the corresponding portfolio adjustments caused by smaller but sharp sell-offs.
“We have observed in the past that sentiment-driven changes can often lead to defensive portfolio adjustments, even if they do not reach the arbitrary 20% threshold. In other words, we believe that bear markets are actually regime changes in market structure, characterized by deteriorating fundamentals and reduced liquidity, rather than simply percentage declines,” Duong said.
In addition to the 200-day simple moving average, Duong highlighted Bitcoin's risk-adjusted return, measured in standard deviations (z-score) relative to the average return over the previous 365 days, as another effective way to identify cryptocurrency bear markets.
“Our [z-score] model suggests that the last bull cycle ended in late February. However, it has classified all subsequent activity since then as ‘neutral,’ highlighting its potential lag in rapidly changing market dynamics,” Duong said, calling for a more cautious stance on risk assessments for now.
The coming winter could be especially harsh for alternative cryptocurrencies amid a slowdown in venture funding.
Although BTC hit new records earlier this year, it has significantly exceeded
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