Coinbase Highlights Structural Weakness in Crypto Market: Bitcoin Drops Below 200-Day SMA
Coinbase’s institutional research indicates that the cryptocurrency market is experiencing a weak phase, with Bitcoin falling below its 200-day simple moving average (SMA), signaling a potential long-term downturn. The altcoin market has seen a 41% decrease since December 2024, and venture capital funding has dropped by 50%-60%, reflecting declining institutional interest. Bitcoin’s z-score suggests its upward trend has stagnated since late February, leading to more conservative investor behavior. David Duong, Coinbase’s research head, anticipates a potential market equilibrium by mid-second quarter of 2025. Despite potential recovery signals, the emphasis is on risk management due to structural changes and macroeconomic pressures. The weakened market trend may have lasting effects on prices and investor behaviors.
Bearish
The news underscores a bearish outlook for the cryptocurrency market, particularly with Bitcoin falling below its 200-day SMA, a key technical indicator signaling potential long-term downturns. The decline in venture capital investments and weakening institutional interest highlight concerns over the market’s ability to stimulate rapid growth. The stagnation of Bitcoin’s upward trend after February further suggests a cautious market sentiment. In the short term, traders might see continued volatility and a preference for conservative strategies. Long-term impacts could include sustained lower prices and alterations in investor behavior due to structural market changes.