Crypto Bull Run may have ended with the market ready for a winter characterized by prolonged losses and stagnation, according to Coinbas’s institutional arm.
“The 200dma Model on Bitcoin Does Suggest That The Token’s Recent Steep Decline Qualifies This As A Bear Market Cycle Starting in Late March. But the Same Exercise Performed On The Coin50 Index (Which Includes The Top 50 Tokens By Market Capitalization) Shows Trading in Bear Market Territory Since The End of February, “David Duong, Global Head of Research At Coinbase Institutional, Said In A Note Published Monday.
Bitcoin slipped during his 200-day simple sliding average (SMA) on March 9 and has since established a foothold under the same in a sign of a long-term bearish shift in momentum. The 200-day SMA is widely traced to measure long-term trends with sustained features over the same, which represents a bull market and vice versa.
Duong noted this observation while approaching the challenges of identifying a crypto bear market where 20% or more corrections are routine. In contrast, a 20% decrease is typically used to define bear markets in stock markets.
The report claimed that the arbitrary 20% often fail to account for an investor mood and resulting portfolio adjustments spurred by smaller, more intense sales.
“We have seen in the past that mood-driven falls can often trigger defensive portfolio adjustments, despite not meeting the arbitrary threshold of 20%. In other words, we believe the bear markets basically represent regime shifts in the market structure drawn by worsening basic conditions and shrinking liquidity-snarers than only their percentage rejects,” Duong noted. “
In addition to the 200-day SMA, Duong highlighted Bitcoin’s risk-adjusted performance measured in standard deviations (Z-score) compared to the average performance over the previous 365 days as another effective method of identifying Crypto Bear markets.
“Our [z-score] Model shows that the latest bull cycle ended in late February. But it has since classified all subsequent activity as “neutral” that highlights its potential delay in rapidly changing market dynamics, “Duong said, calling for a defensive attitude to the risk tree at the moment.
The upcoming winter may be more brutal for alternative cryptocurrencies considering the slowdown in the Venture Capital (VC) financing.
While BTC set new heights early this year, well over the 2021 summit of $ 70K, the bullish trend to inspire more risk of taking the VC room, leaving the total financing 50% -60% below 2021-22 levels.
Duong said the crypto market “can find a floor in the middle of late 2Q25-to create a better 3Q25.”
