Cryptocurrency Market Faces Tough Q1 2025: Potential Recovery in Q2

The challenging start to the year for crypto assets resulted in a significant decline, with widespread liquidations in derivatives markets and weakening investor confidence. Ethereum's performance in Q1 was one of its worst since 2018, highlighting the market's struggles. While Bitcoin's losses were less severe, the overall sentiment in Q1 was bearish, with both major cryptocurrencies contributing to the downturn. The poor market performance led to many traders exiting, reducing liquidity as investors withdrew from high-risk assets, highlighting the challenges for the market in Q2. Despite the difficulties in Q1, there is growing optimism for a potential recovery in Q2, with expectations of important decisions by the U.S. SEC on spot crypto ETF applications and potential interest rate cuts by the Federal Reserve, which could attract more institutional investment and support the performance of risk-on assets like cryptocurrencies.