The first quarter of 2025 saw a notable slowdown in crypto trading activity. Overall trading activity decreased by approximately 40.65%, and the overall market capitalization decreased by 17% to $2.71 trillion1. This decline was primarily driven by geopolitical tensions and U.S. tariffs12. These factors led to increased volatility and reduced investor risk appetite. Bitcoin managed to maintain stability, trading between $78K and $80K; however, many altcoins, including ETH and BNB, suffered substantial losses1. The decentralized finance (DeFi) sector also experienced a downturn, with total value locked (TVL) decreasing by 18% to $99 billion1.

Despite these challenges, some positive developments were noted. Institutional demand for Bitcoin and Layer-2 solutions continued to gain traction, and the use of stablecoins increased significantly32. The market is expected to shift towards assets with strong fundamentals as the second quarter progresses1. Additionally, temporary suspension of tariffs and potential regulatory clarity could improve market sentiment in the near future2.