Altcoin Market Cap Drops 41% as Crypto Winter Looms

Coinbase, a publicly traded US-based crypto exchange, has released a monthly market review indicating that while the crypto market has experienced a contraction, there are signs of improvement in the coming quarter. The altcoin market cap has decreased by 41% from its December 2024 highs of $1.6 trillion to $950 billion by mid-April. This metric reached a low of $906.9 billion on April 9 and stood at $976.9 billion at the time of the report.

Venture capital funding to crypto projects has reportedly decreased by 50%–60% from 2021–22. Coinbase’s global head of research, David Duong, highlighted that a new crypto winter may be upon us. He noted that several converging signals, including extreme negative sentiment due to global tariffs and potential further escalations, may indicate the start of a new ‘crypto winter.’

The report attributes the decrease in venture capitalist interest to the current macroeconomic environment, which has significantly limited the onboarding of new capital into the ecosystem, particularly in the altcoin sector. Duong explained that traditional risk assets have faced sustained headwinds from fiscal tightening and tariff policies, contributing to the paralysis in investment decision-making.

According to Coinbase researchers, these factors have resulted in a difficult cyclical outlook for the digital asset space, warranting continued caution in the next four to six weeks. However, the report’s author remains optimistic, stating that the market is likely to change directions explosively. Duong cited several metrics to indicate when the crypto market is moving between bull and bear market phases, including risk-adjusted performance and the 200-day moving average.

Another metric mentioned was the Bitcoin (BTC) Z-score, which compares market value and realized value to identify overbought and oversold conditions. This metric naturally accounts for crypto’s larger volatility but is slow to react. Coinbase’s model, based on it, determined that the bull market ended in late February but has since deemed the market neutral.

Coinbase’s analyst suggested that the 200-day moving average is a better indicator for determining market trends. It smooths out short-term noise while being relevant by considering the last 200 days’ worth of market data. The report also noted that gauging the broader crypto market’s trend by the direction in which Bitcoin is moving is increasingly less reliable. This is because crypto expands into new sectors with decentralized finance (DeFi), decentralized physical infrastructure networks (DePIN), artificial intelligence agents, and more, all with particular market forces independent of Bitcoin.

Duong points out that the 200-day moving average suggests that Bitcoin’s recent decline moved it into bear market territory in late March. However, applying the same model to the Coin50 Coinbase index based on the top 50 crypto assets shows a bear market since the end of February. Recent reports indicated that Bitcoin is showing growing resilience to macroeconomic headwinds compared with traditional financial markets. Duong sees Bitcoin becoming less of a generalized crypto indicator as a consequence of this trend, suggesting that a holistic evaluation of crypto’s aggregate market activity will be needed to better define bull and bear markets for the asset class.