In a market review published on April 16, asset manager Bitwise declared Q1 2025 as “the best worst quarter in crypto history.” Despite groundbreaking progress in the industry, the market performance told a different story. According to Bitwise CIO Matt Hougan, the first quarter was “frustrating,” even as it marked major milestones for the crypto space.
The beginning of 2025 saw historic wins for the industry: the inauguration of the first openly pro-crypto U.S. president, the launch of a national Bitcoin reserve, the SEC easing its aggressive stance by dropping key lawsuits, and a clear end to the anti-crypto tone of the previous administration. “Crypto dreamed of these developments for years, and they finally all happened,” Hougan noted.
The Good, The Bad, and The Ugly
Despite the positive news, markets reacted with unexpected negativity. The Bitwise 10 Large Cap Crypto Index dropped 18%, Ethereum plummeted 45%, and crypto equities fell by 27%. Overall, nearly $650 billion was wiped out from the market, as total crypto market cap dropped 20% in Q1 and continued falling into April — currently down 30% from the all-time high of $3.9 trillion in January.
Still, not everything was bleak. Hougan pointed to encouraging signals beneath the surface, urging investors to “search out things that are hitting new all-time highs when prices are down,” suggesting they could hint at the next bull market.
Key positives from Q1 included:
- Stablecoin circulation hit a record $218 billion (up 13.5% QoQ), now reaching $236 billion — about 8.6% of the total market cap.
- Tokenized real-world assets surged 37% QoQ, marking another all-time high.
- Regulated Bitcoin futures saw record volume and open interest, reflecting growing institutional interest in crypto as a macro asset class.
Hougan believes these factors could drive momentum going into Q2 2025.
Challenges and Tailwinds Ahead
On the downside, Q1 2025 also saw major setbacks: a $1.5 billion hack on Bybit and the collapse of countless meme coins as their bubble burst. Yet, Bitwise remains optimistic.
The report highlights several key tailwinds:
- Central banks are pivoting to monetary easing and expanding money supply — a traditionally favorable condition for risk-on assets like crypto.
- U.S. regulatory relief and clearer frameworks for stablecoins and DeFi could ignite the next rally.
- Ongoing global economic tensions — including trade wars, capital controls, and currency instability — are pushing investors toward Bitcoin as a hedge, much like gold.
Bitwise concludes that while Q1 2025 may have been “the best worst quarter” in crypto history, the foundation laid during this period could set the stage for a stronger and more sustainable bull market ahead.
