Is the crypto market facing a Bear Market? How to define the bull-bear boundary?

As of mid-April, the total market capitalization of cryptocurrencies, excluding Bitcoin, has fallen from a high of $1.6 trillion in December last year to $950 billion, a decline of 41%. Meanwhile, the scale of venture capital has also decreased by 50%-60% compared to the levels of 2021-2022. At this stage, we recommend adopting a cautious risk management strategy. However, we expect that the crypto market prices may stabilize in the late second quarter of 2025, laying the foundation for a rebound in the third quarter.

Market Overview

Multiple factors are overlapping, indicating that a new round of "crypto winter" may be approaching. The introduction and potential escalation of global tariff policies have led to a significant deterioration in market sentiment. The total market capitalization of cryptocurrencies, excluding Bitcoin, has fallen to $950 billion, a 41% drop from the peak in December last year, and a year-on-year decline of 17%. It is worth noting that this level is even lower than during most of the period from August 2021 to April 2022.

In the first quarter of 2025, although venture capital in the crypto industry rebounded compared to the previous quarter, it still remains 50%-60% lower than the peak period of 2021-2022. This significantly limits the entry of new capital into the ecosystem, particularly impacting the altcoin sector more severely. These structural pressures primarily stem from the current uncertainty in the macroeconomy. Fiscal tightening and tariff policies continue to suppress traditional risk assets, leading to a stagnation in investment decisions. Although the regulatory environment provides some support, the recovery path for the crypto market remains challenging against the backdrop of a weak overall stock market.

Multiple factors are intertwined, making the digital asset market face a severe cyclical outlook. In the short term, ( is expected to remain cautious for the next 4-6 weeks, ). However, we believe that investors should adopt flexible tactics to cope with market fluctuations. Because once market sentiment is repaired, a rebound could start quickly. We remain optimistic about the market performance in the second half of 2025.

How to Define Bull and Bear Markets

In the stock market, a common empirical standard for determining a bull or bear market is a rise of 20% from recent lows or a drop of 20% from highs. However, this standard is essentially subjective and does not apply to the highly volatile crypto market. Crypto assets often experience price fluctuations of over 20% within a short period, but this does not necessarily indicate a fundamental change in market trend. Historical data shows that Bitcoin can drop 20% in a week and still be in a long-term upward trend, and vice versa.

In addition, the crypto market operates 24/7, making it a barometer of global risk sentiment during traditional financial market closures. As a result, cryptocurrency prices often react more strongly to global events. For example, from January to November 2022, during the Federal Reserve's aggressive interest rate hike policy, the US stock market fell by 22%; meanwhile, Bitcoin started declining in November 2021, and over the same period, it saw a cumulative drop of 76%, approximately 3.5 times greater than the decline in US stocks.

It should be noted that the "20% rule" traditionally used to define the bull and bear markets is essentially just a rule of thumb, and there is still no unified standard. Identifying market trends often relies more on experience and intuition rather than strict mathematical models.

Nonetheless, to make the judgment more systematic, we refer to the closing price highs and lows of the S&P 500 index within a rolling one-year time window to identify key market reversals. According to this method, the US stock market has roughly experienced four bull cycles and two Bear Markets over the past decade.

However, the "20% threshold" also overlooks at least two significant events that impacted market sentiment, but the pullbacks were between 10% and 20%. For example, the volatility rise caused by the turmoil in the Chinese stock market at the end of 2015, and the market turbulence resulting from the escalation of global trade frictions in 2018.

In the past, we have seen that market declines driven by emotions often trigger defensive adjustments in portfolios, even though the decline has not reached the artificially set threshold of 20%. In other words, we believe that a Bear Market is essentially a reflection of a shift in market structure, characterized by deteriorating fundamentals and liquidity contraction, rather than just the magnitude of price declines. Additionally, the "20% rule" carries the risk of paralysis, as it overlooks some early warning signs, such as weakened market depth and rotation into defensive sectors, which are often precursors to significant downturn cycles in history.

Alternative Indicators

Therefore, we attempt to find alternative indicators that can more accurately reflect the relationship between price trends and investor sentiment, applicable to stocks and crypto assets. The definition of a Bear Market not only involves asset returns but is also closely related to market sentiment. This concept is relatively complex because what we observe is not simply a continuous rise or fall, but rather turning points in long-term trends. For example, the COVID-19 pandemic period is a typical case, where the market experienced a rapid and severe decline followed by a quick rebound. Of course, the reason this Bear Market was relatively short-lived was largely due to the large-scale fiscal and monetary stimulus policies implemented by governments afterwards, which prevented investors from falling into a long-term drawdown.

Rather than relying on heuristics like the "20% rule", we prefer to adopt two types of risk-adjusted metrics: (1) risk-adjusted return performance measured by standard deviation; (2)200-day moving average (200DMA). For example, from November 2021 to November 2022, Bitcoin's performance declined by 1.4 standard deviations compared to the average performance of the previous 365 days; during the same period, the decline in the US stock market also reached 1.3 standard deviations. From a risk-adjusted perspective, the 76% drop in Bitcoin can be considered comparable in magnitude to the 22% drop in the S&P 500 index.

Due to the standard deviation indicator's natural reflection of the high volatility in the crypto market, the z value ( standard score ) is very suitable for the analysis of crypto assets. However, it also has certain limitations: on one hand, the calculation is relatively complex; on the other hand, when the market trend is relatively stable, there are fewer signals, and the response to trend changes may not be sensitive enough. For example, our model shows that the recent bull market cycle ended in late February, after which the market status was classified as "neutral," reflecting that this model may have lagging effects during periods of severe market volatility.

In contrast, the 200-day moving average (200DMA) provides a more concise and robust method for identifying ongoing market trends. Because it is based on long-term data calculations, it effectively smooths out short-term fluctuations and adjusts in a timely manner according to the latest price movements, thereby providing clearer momentum signals.

The judgment method is also relatively intuitive:

• When the price remains above the 200DMA with upward momentum, it is typically regarded as a bull market;
• When the price is consistently below the 200DMA and accompanied by downward momentum, it often indicates the formation of a Bear Market.

This method not only aligns with the generalized trend signals reflected by the "20% rule" and z-value model, but also enhances the practicality and foresight of insights in a dynamic market environment. For example, it successfully captured key downturn periods such as the early stage of the pandemic in 2020, the Federal Reserve's interest rate hike cycle from 2022 to 2023, while also reflecting the crypto winter from 2018 to 2019, and the pullback caused by China's mining ban in 2021.

In addition, we found that the 200DMA better reflects the dramatic fluctuations in investor sentiment over different periods.

Is the encryption winter coming?

So have we entered a round of Bear Market in the crypto market? Previous analysis mainly focused on Bitcoin, as it has sufficient historical data for comparison with traditional markets like the US stock market. However, as the category of encryption assets continues to expand into emerging areas such as Meme coins, DeFi, DePIN, and AI agents, Bitcoin is gradually unable to fully represent the overall market trend.

For example, the 200DMA model of Bitcoin shows that since late March, its sharp pullback has entered the Bear Market range. Analyzing the COIN50 index (, which covers the top 50 tokens by market cap, using the same model, it has been found that since the end of February, this type of asset has clearly been in a Bear Market state. This trend is consistent with the total market value of encryption, excluding Bitcoin, which has dropped 41% from its peak last December to $950 billion; in contrast, Bitcoin's decline during the same period has been less than 20%. This gap reflects that altcoins at the end of the risk curve exhibit higher volatility and risk premium.

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Conclusion

As the "store of value" attribute of Bitcoin continues to strengthen, we believe that in the future, a more systematic and comprehensive approach is needed to assess the overall performance of the crypto market, in order to more accurately define its bull or bear market status, especially in the context of an increasingly diverse asset class. Nevertheless, both Bitcoin and the COIN50 index have currently fallen below their respective 200-day moving averages, a signal that indicates the market may be in the early stages of a long-term downward trend. This is consistent with the trends of declining total market capitalization and shrinking venture capital, both of which are important characteristics that may indicate the arrival of a "crypto winter".

Therefore, we recommend that a defensive risk management strategy should still be maintained at this stage. Although we still expect the prices of crypto assets to stabilize in the later part of the second quarter of 2025 and lay the groundwork for improvements in the third quarter. Currently, the complex macro environment still requires investors to remain highly cautious.

![Coinbase Monthly Outlook: A New Round of "Bear Market" is Coming, the Market Will Welcome a Rebound in the Second Half of the Year])https://img-cdn.gateio.im/webp-social/moments-e999ef6f4b2a9bd0920b0c0800a10265.webp(

![Coinbase Monthly Outlook: A New Round of "Crypto Winter" Approaches, the Market Will Welcome a Rebound in the Second Half])https://img-cdn.gateio.im/webp-social/moments-5340fa8229b6aa5753b2bf0633c6944f.webp(