Key Takeaways:
- Bitcoin & Ethereum Struggled in Q1 2025: Bitcoin dropped 6.49%, while Ethereum suffered a 37.98% decline, marking its worst Q1 since 2018.
- Macroeconomic & Regulatory Uncertainty Weighed on Crypto: Trump’s tariffs and Fed rate uncertainty contributed to the downturn.
- Q2 2025 Could Bring a Turnaround: Bitcoin’s halving, potential rate cuts, and regulatory clarity could drive a recovery in the coming months.
As we close the first quarter of 2025, Bitcoin (BTC) and Ethereum (ETH) have failed to hold on to their early bullish gains and are likely to end Q1 in the red. After a strong start in January, both these assets suffered a sharp downturn in March. Investors are now grappling with the question of what happened, what to expect, and where we go from here in the second quarter.
Q1 2025: Bitcoin crosses $100k, Ethereum follows
The year started on a bullish note with Bitcoin rallying nearly $100,000 and eventually hit $102,402 in February 2025 and the Ethereum price reaching above $5,600, marking an historic milestone for both crypto asset.
Bitcoin price history | Source: CoinMarketCap
Some factors contributed to the growth of Bitcoin and Ethereum in January and February.
- Adaption on a Big Scale: The sentiment has remained bullish for Bitcoin given that some major hedge funds and investors like Fidelity and Blackrock continue to purchase them.
- Inflows of Bitcoin ETF: The recently opened spot Bitcoin ETFs saw record obhods higher than other trading assets and their prices as well.
- Upgrades to Ethereum: Investors remained optimistic about Ethereum’s upcoming Dencun upgrade that improved gas fee usage and topped their scalability.
- Macroeconomic describes: A dovishstance from the US Federal Reserve in early January signalling potential rate cuts, boosted risk-on assets, including crypto
- Trump’s Election: The election of Donald Trump into office as thePresident of the United States further fueled Bitcoin’s rally because investors and traders were anticipating a more favorable Bitcoin regulatory environment under his administration.
February and March Sharp Reversal
Despite the rally at the start of the year, a shift in market sentiment in February caused prices to decline. The initial indicators of decline appeared when there was a heightened focus on regulation from the Secretary of the U.S. Securities and Exchange Commission (SEC) as they began to enforce tighter control on the staking services and even on DeFi platforms. This created fear for institutional investors, causing them to withdraw profits, which decreased liquidity in the market.
Worsening the situation, macroeconomic factors triggered another wave of concern due to a March inflation report coming in more aggressive than expected, leading analysts to believe the Federal Reserve would revise its anticipated July rate cuts. Using the same logic, investors began to make relaxing trades on risk assets, including cryptocurrencies, to reallocate funds due to the expected high interest rates for a longer period.
As of March 26, the value of Bitcoin had decreased to $87,558, which is a 6.49% reduction for this quarter, making it the worst Q1 ever since 2020.
Ethereum performed even worse by dropping almost 38%, earning it the worst Q1 performance since 2018. Ethereum cannot be considered as strong a competitor to Bitcoin due to its ETH/BTC ratio dropping to 0.2348 during March, the lowest it has been since May 2020.
The entire cryptocurrency market took a hit, estimating a total loss of 11.65% in market cap since the beginning of this year as it reached $2.88 trillion towards the end of March.
The overall mood towards the market became more pessimistic, which is evident from the Crypto Fear & Greed index recording a score of 47, which indicates a state of neutrality and signals growing concern amongst investors.
What’s next for Q2 2025?
The potential for important change is high in the second quarter for Bitcoin and Ethereum. Analysts expect Bitcoin’s next major rally to begin roughly around April 30, although price movement in the short term is still a mystery. Some experts, including Swan Bitcoin CEO Cory Klippsten, suggest that there is a 50% likelihood that Bitcoin achieves new all-time highs by the end of June.
The execution of the Dencun upgrade will be of great interest for Ethereum. Should the upgrade improve network performance and lower fees, Ethereum should experience higher adoption rates and a renewed sense of confidence from investors. On the other hand, if the upgrade does not meet reasonable expectations, ETH may not be able to reach the highs it saw earlier this year.
Read also: Hedera (HBAR) Gains Momentum After Market Recovery
