Coinbase, the publicly traded US-based cryptocurrency exchange, suggests a potential rebound in the crypto market is likely in the third quarter after a recent decline. The exchange’s analysis is sobering, but it identifies some promising signs that a turnaround may soon be coming to this persistent bear market.

Crypto Winter Concerns

David Duong, Coinbase’s global head of research, has warned of a coming “crypto winter.” Venture capital funding for new crypto projects has plummeted. News reports claim that it has dropped almost 50% to 60% since 2021-22.

"Several converging signals may be pointing to the start of a new ‘crypto winter’ as some extreme negative sentiment has set in due to the onset of global tariffs and the potential for further escalations." - David Duong, Coinbase's global head of research

Coinbase’s analysis leverages a number of methodological models to determine U.S. market trends. Based on their 200-day moving average Bitcoin model, Bitcoin fell into bear market territory by the end of March. Coinbase analysts believe the 200-day moving average to be the most reliable indicator for deciding if a market is trending up or down.

Coinbase’s Z-score Bitcoin model recently signaled that this bull market ended back in late February. It’s recently gone from a bearish to a neutral market outlook. This divergence in models underscores the competitive nature of today’s market.

Coin50 Index Analysis

It’s had a difficult bear market since peaking in the end of February. According to data from BTC Tools, the Coin50 index has dropped to its lowest level of $906.9 billion on April 9.

The Coin50 index was at $976.9 billion at press time of this article. Coinbase’s model, grounded on their Coin50 index, sees the market as neutral right now. That shows we could see at least a nascent recovery after the recent drop off.

Altcoin Market Contraction

As Coinbase’s April 15 monthly outlook for institutional investors noted, the altcoin market has undergone a sharp contraction. The total altcoin market cap fell precipitously by 41%. It dropped from that high of December 2024 — $1.6 trillion — all the way down to $950 billion by mid-April.

Applying Coinbase’s 200-day moving average model to the Coin50 index suggests we are in a bear market. Still, analysts say the market is set up for a strong rebound and a fundamental shift in direction.

"a difficult cyclical outlook for the digital asset space," - Coinbase researchers