Q1 2025 Cryptocurrency Market Observation

Market Trends

1. AI Tokens and Meme Coins Dominate the Market:

In Q1 2025, AI tokens and meme coins continued to attract significant market attention, becoming major investment themes. This trend indicates a strong interest from investors in emerging technologies and entertainment assets.

2. Decline in Total Value Locked in DeFi:

Due to the general decline in altcoin prices, the Total Value Locked (TVL) in decentralized finance (DeFi) decreased by 27.5% in the first quarter, a reduction of $48.9 billion.

3. Decline in CEX Spot Trading Volume:

The spot trading volume of the top 10 centralized exchanges (CEX) fell to $5.4 trillion in Q1, a decrease of 16.3% compared to the previous quarter.

4. Market Sentiment and Capital Flow:

Despite a surge in market sentiment in January, concerns about economic recession had a severe impact on the market, leading to a loss of $633 billion in the cryptocurrency market in the first quarter.

Major Events

1. Global Tariff Policies and Macroeconomic Uncertainty:

The implementation of global tariff policies and potential escalations intensified negative sentiment, and traditional risk assets continued to face pressure in a tightening fiscal environment, with this macroeconomic uncertainty directly transmitting to the crypto market.

2. Surge in Major Bankruptcy Cases in the U.S.:

Major bankruptcy cases in the United States surged by 49% in Q1 2025, the highest level since 2010. This wave of bankruptcies can be attributed to various economic factors, including rising interest rates and inflationary pressures.

3. Decrease in Rug Pull Incidents but Increased Destructive Power:

Although the Web3 ecosystem has lost nearly $6 billion due to such incidents since the beginning of 2025, the number of “Rug Pull” events has decreased compared to the same period in 2024.

Influencing Factors

1. Economic Policies and Central Bank Decisions:

The cryptocurrency market has once again become part of the macroeconomy, with economic policies, central bank decisions, and geopolitical events all directly affecting the performance of digital assets.

2. Technological Improvements and Infrastructure Enhancements:

Coinbase improved Solana's infrastructure through asynchronous trading and bare-metal servers, increasing block processing throughput by 5 times and RPC performance by 4 times. These technological improvements significantly enhanced Solana's performance and user experience.

3. Intrinsic Market Risks:

Leverage and shrinking trading volumes are major manifestations of intrinsic market risks, which have exacerbated market volatility.