Coinbase Institutional Declares Crypto Winter as Bitcoin Slips Below 200-Day SMA

Coinbase Institutional has indicated that the crypto bull run may have come to an end, with the market now entering a phase of prolonged losses and stagnation, often referred to as a "crypto winter." This assessment is based on the performance of Bitcoin and the top 50 tokens by market capitalization.

David Duong, the global head of research at Coinbase Institutional, noted that Bitcoin's recent steep decline, which began in late March, qualifies as the start of a bear market cycle. This conclusion is drawn from the 200-day simple moving average (SMA) model, which is widely used to gauge long-term trends. Bitcoin slipped below its 200-day SMA on March 9 and has since remained below this level, indicating a long-term bearish shift in momentum.

Duong also highlighted that the COIN50 index, which includes the top 50 tokens by market capitalization, has been trading in bear market territory since the end of February. This suggests that the broader crypto market has been experiencing a bearish trend for some time.

Identifying a crypto bear market can be challenging due to the routine nature of 20% or more corrections in the crypto space. In contrast, a 20% decline is typically used to define bear markets in stock markets. Duong argued that the arbitrary 20% threshold often fails to account for the impact of smaller, more intense sell-offs on investor sentiment and portfolio adjustments.

Duong noted that sentiment-driven declines can trigger defensive portfolio adjustments, even if they do not meet the arbitrary 20% threshold. He believes that bear markets fundamentally represent regime shifts in market structure, characterized by deteriorating fundamentals and shrinking liquidity, rather than just percentage declines.

In addition to the 200-day SMA, Duong highlighted bitcoin's risk-adjusted performance measured in standard deviations (z-score) relative to the average performance over the previous 365 days as another effective method for identifying crypto bear markets. The z-score model indicates that the most recent bull cycle ended in late February, but it has since classified all subsequent activity as "neutral," highlighting its potential lag in rapidly changing market dynamics.

Duong called for a defensive stance on risk assets for the time being, given the current market conditions. The impending winter may be more brutal for alternative cryptocurrencies, considering the slowdown in venture capital (VC) funding. While Bitcoin set new highs early this year, well above the 2021 top, the bullish trend failed to inspire more risk-taking in the VC space, leaving the overall funding 50%-60% below 2021-22 levels.

Duong suggested that the crypto market "may find a floor in mid-to-late 2Q25 – setting up a better 3Q25." This forecast is based on the current market conditions and the potential for a recovery in the latter half of 2025. However, it is important to note that this is a forecast and not a guarantee of future performance.