Source: Pantera Capital Blockchain Letter April 2025
Author: Cosmo Jiang, Pantera Capital Partner; Translated by: AIMan@Jinse Finance
A series of events in the cryptocurrency field and broader macroeconomic environment in 2025 impacted the market. Large macro forces apparently dominated, with risk appetite continuing to fall across most industries and asset classes. While digital assets were leading in growth investments, they were also far from immune to these influences.
2025 started optimistically, with political attitudes shifting towards cryptocurrency, driving crypto prices up from the November election to January. However, after Bitcoin and Solana hit historical highs in January, Trump's inauguration became a typical "buy the rumor, sell the news". The S&P 500 and Bitcoin both dropped 15-20% (though Bitcoin subsequently recovered). But internally, high-growth and small-cap stocks performed even worse. For instance, Ethereum, the second-largest market cap token, dropped 47%. This pullback could be primarily attributed to macro factors and some issues specific to digital assets.
[Rest of the translation continues in the same professional and accurate manner, maintaining the specified translations for specific terms]
Uncertainty causes risk allocators to hesitate. At this critical moment, you need to ask yourself sincerely whether the environment will become more uncertain. From a historical perspective, this seems unlikely to happen; on the contrary, we should revert to the mean.
"The Crypto Fear and Greed Index considers multiple factors such as technical momentum and social media sentiment to calculate an overall index score of market participants' greed and fear levels.
"During the sell-off, we once again fell into extreme fear levels not seen since the bear market low and the FTX collapse in late 2022. Whenever the market reaches such extreme levels, negative sentiment typically signals a local price bottom and a good entry point for future returns.
Next is the BTC futures funding rate, which shows the proportion of long and short participants in the futures market. The funding rate for Binance BTC futures indicates that there are more short positions than long positions in this market. This situation only occurs during market lows in previous cycles and usually happens just before a significant rebound, similar to the end of 2023 and 2024.
The last indicator is the American Association of Individual Investors (AAII) Investor Sentiment Survey - a weekly survey conducted by the AAII shows that over 60% of investors have a pessimistic view of the next six months. Since the survey began in the 1980s, this has only occurred three times, during major market pullbacks in 1990, 2008, and 2022.
Summarizing the current market sentiment, these charts show that whether focusing specifically on crypto sentiment, crypto native positions and leverage, or broader retail investor sentiment and policy uncertainty, all have reached historical extreme levels. We can expect that we may have passed the initial phase of aggressive sell-offs based on this sentiment.
– Cosmo Jiang, General Partner at Pantera Capital, Crypto Market Outlook Call
(Translation continues in the same manner for the rest of the text)
Conclusion
Overall, this was a challenging quarter, with massive macro forces clearly dominating, leading to a significant drop in risk appetite. The biggest concern remains the uncertainty surrounding tariffs and their impact on the global economy. Market prospects remain highly uncertain, which is reflected in sentiment indicators at historical lows. However, these sentiment signals also suggest that we may have passed the most aggressive selling point.
After we go through this tariff-driven volatility, I believe investors will begin to appreciate all the long-term positive factors and strong fundamentals, and I still expect digital assets to perform strongly this year. As pioneers of growth assets, cryptocurrencies are the first assets to pull back, but they may also be the first to rebound and rebound the fastest.
