Just three months ago, the cryptocurrency market was buzzing. Litecoin Bitcoin btc
-1.55%
Ethereum Ethereum had surpassed $109,000 in value for Bitcoin. eth
-3.29%
A new wave of optimism swept through the market as a result of Ethereum’s strong hold and the pro-crypto Donald Trump’s return to the White House.
However, as the first quarter of 2025 comes to a close, that optimism has subtly given way to uncertainty. Since March 31, Bitcoin has dropped by nearly 13% for the quarter, trading around $82,000. It is on track to post its worst first-quarter performance in seven years, snapping a two-year streak of strong gains. To put that into perspective,
Bitcoin surged 72% in the first quarter of 2023 and 69% in the first quarter of 2024. It hasn’t faltered this badly in the first quarter since 2018, when it fell nearly 50% as the ICO boom ended. However, Ethereum is experiencing a much steeper decline. This quarter, the second-largest cryptocurrency by market cap has lost a staggering 46.4%, falling close to $1,800.
That is nearly identical to its drop of 46.6% in the first quarter of 2018, making this the company’s worst performance in seven years. However, a more nuanced picture begins to emerge as we zoom out. Bitcoin has finished the first quarter in the red four times out of nine times between 2017 and 2025, while Ethereum has had three losing quarters during the same time period.
The broader context—persistent inflation, shaky investor confidence, and growing geopolitical risks—make this particular downturn stand out. Therefore, the issue at hand is whether this was simply a seasonal lapse or a warning sign of more serious issues to come. Could prices rise again if the macro environment favors cryptocurrency? Let’s examine it more closely. How to decipher the crypto slide The U.S. released the core Personal Consumption Expenditures (PCE) index for February, a crucial inflation metric that the Federal Reserve closely monitors, on March 28. This caused a significant drop in the cryptocurrency market. The increase over the previous year was 2.8%, slightly higher than the expected 2.7%, but still not enough to reassure investors. Core PCE, in contrast to headline inflation, removes the noise of energy and food prices, making it easier to see long-term pricing trends. In addition, that clear view demonstrated that inflation is not cooling as rapidly as the markets had anticipated. This unexpected inflation occurred just as tensions over international trade were rising. A new wave of macroeconomic tension has been brought about by President Donald Trump’s hardline tariff strategy. It started at the beginning of February with a threat of 25% tariffs on goods from Canada and Mexico. Allegations of Beijing’s involvement in fentanyl trafficking led to a swift 20 percent tariff on all Chinese imports. Few industries have been spared, including automobiles, aluminum, steel, and even oil from Venezuela. The “Dirty 15” are approximately 15 nations that, due to imbalances and geopolitical friction, may soon face reciprocal tariffs. The administration has made this list public. The worldwide retaliation has been swift and vehement. American agricultural exports were the target of Chinese tariffs in response. A multi-phase duty plan covering approximately $28 billion in U.S. goods is being prepared by the EU. Mexico is said to be finalizing its own measures for the beginning of April, while Canada responded with retaliatory duties totaling $60 billion Canadian dollars. Unexpectedly, the uncertainty did not go over well with the markets. On the day the PCE data were released, the S&P 500 and NASDAQ 100 both lost more than 2%, wiping out more than $1 trillion in market capitalization. In the larger risk-off move, crypto fell. Assets like ETH, Ripple (XRP), Solana (SOL), and other altcoins lost their recent gains as investor nerves became frayed. On the other hand, Bitcoin struggled under increasing macro pressure.
The majority of recent sales, according to Glassnode, have been made by short-term holders, or people who bought Bitcoin within the previous five months and are now reacting to price fluctuations. Short-Term Holders (less than 155 days), or recent buyers navigating volatile conditions, currently account for all loss realization in the Bitcoin market. Meanwhile, the primary source of profit taking are Long-Term Holders with a duration of greater than 155 days.
— March 28, 2025, glassnode (@glassnode) Long-Term Holders, on the other hand—investors who have held a security for more than 155 days—continue to earn profits and appear to be the primary source of the current profit-taking activity. Many traders have taken a defensive stance and moved capital into cash as long-term inflation expectations have risen to 4.1%, the highest level since 1993. These expectations were closer to 2.6% just three months ago, prior to the implementation of the tariffs.
