Crypto Market Tumbles in Q1 2025 as Recession Fears Weigh on Investors
The first quarter of 2025 was a rough stretch for the crypto world, as highlighted in CoinGecko’s recent report. After a strong start in January, market momentum reversed sharply, with fears of a looming recession overshadowing early optimism.
Across the board, the numbers paint a grim picture. The total value of the crypto market shrank by nearly one-fifth, wiping out over $600 billion in capitalization. Daily trading activity also took a nosedive, dropping by more than a quarter compared to late 2024. Activity on centralized exchanges wasn’t spared either, with spot trading volumes slipping by over 16%. Part of that downturn has been linked to fallout from the Bybit security breach.
Despite a few short-lived highlights—like the buzz surrounding Donald Trump’s inauguration and the surge in Solana-based meme tokens—the enthusiasm quickly faded. The market’s reaction to the LIBRA controversy only added to the sense of uncertainty.
Bitcoin managed to expand its share of the overall market, making up 59.1% of total capitalization, its highest level in years. This suggests BTC remains a relative safe haven compared to altcoins. Still, even Bitcoin wasn’t immune, posting an 11.8% decline over the quarter. That underperformance is particularly notable given that traditional assets like gold and Treasury bonds did better during the same period, even as U.S. trade policy disruptions rattled bond markets.
Ethereum also had a brutal start to the year, losing all the ground it gained in 2024. Meanwhile, total value locked in decentralized finance protocols across multiple chains fell by nearly 28%, indicating broad weakness across DeFi.
Several developments came with mixed results. Solana captured a large share of decentralized exchange trading, but saw its own TVL shrink significantly. Bitcoin ETFs pulled in $1 billion in new investments, yet total assets under management still declined by nearly $9 billion due to price erosion.
Ultimately, while there were occasional bright spots, the general mood remains clouded by economic anxiety. The data suggests that investor caution is growing as global recession risks deepen.
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over 8 years of experience covering the crypto, blockchain and fintech industries, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics.
