Coinbase Issues Caution on Emerging Crypto Winter Amid Bearish Market Indicators
Coinbase, a leading cryptocurrency exchange, has raised concerns about the potential onset of a new crypto winter as key market indicators trend bearish. Analysts point to declining trading volumes, reduced institutional inflows, and macroeconomic uncertainties as contributing factors. The warning comes amid a broader market correction, with major cryptocurrencies like Bitcoin and Ethereum retreating from recent highs. Coinbase’s research team highlights parallels to previous downturns, emphasizing the need for investor caution. Regulatory pressures and shifting risk appetites in traditional finance are also influencing sentiment. Market participants are advised to monitor liquidity conditions and leverage ratios closely in the coming quarters.
Technical analysis
According to David Duong, Global Head of Research at Coinbase, recent declines in Bitcoin and the COIN50 Index, the latter representing the 50 largest non-Bitcoin cryptocurrencies, are not just routine volatility.
Both have broken below their 200-day moving averages, a widely recognized technical indicator used to gauge long-term market momentum. Duong wrote:
“This move below the 200DMA suggests we are entering a bearish cycle. While bitcoin has declined less than 20% from its recent high, the broader altcoin market has experienced much sharper losses, underlining the increased risk and volatility further down the crypto risk curve.”
The report argued that traditional definitions of bull and bear markets, such as the 20% threshold commonly used in equity markets, are too simplistic for the crypto space. With digital assets often swinging 20% or more within days, alternative metrics are needed to assess true market conditions.
The firm favors two measures in particular: risk-adjusted performance using standard deviations (or z-scores), and the 200DMA trend. These tools offer a more nuanced view, reflecting not just price drops but also momentum shifts and changes in investor psychology.
The analysis showed that Bitcoin’s recent decline represents a 1.4 standard deviation move below its historical norm, comparable to the magnitude of stock market corrections in past bear markets.
At the same time, the COIN50 Index has been in bear territory since late February, reinforcing concerns about the health of the broader crypto ecosystem.
Cautious outlook
While Coinbase is advising a defensive stance in the short term, particularly over the next four to six weeks, it remains cautiously optimistic about the second half of 2025.
The report suggested that the market may find a bottom by the end of the second quarter, potentially paving the way for a stronger third-quarter recovery.
Duong noted:
“Sentiment can change quickly in crypto once macro pressures ease. But right now, the environment calls for discipline and selectivity.”
The report also emphasized the growing complexity of the crypto market, arguing that Bitcoin can no longer serve as a simple proxy for the entire space.
As sectors like DeFi, infrastructure tokens (DePIN), and AI-driven agents expand, the divergence in performance and risk is becoming more pronounced.
According to the report:
“As bitcoin matures into a store-of-value asset, understanding the broader market requires more granular tools. The days of treating the crypto market as a monolith are over.”
Despite the challenges, Coinbase believes the long-term fundamentals for crypto remain intact. However, until macroeconomic conditions stabilize and capital begins flowing back into the space, volatility and caution are likely to dominate.
