Bitcoin is closing out the first quarter of 2025 on a weak note, marking its worst Q1 performance since 2018.
The flagship cryptocurrency has suffered a 13% decline over the past three months, with renewed macroeconomic pressures, U.S. trade tariffs, and a lack of bullish momentum dampening investor sentiment.
As Bitcoin teeters on the edge of the $80,000 support level, traders brace for potential volatility in the coming weeks.
Macroeconomic Headwinds and Trade Tariffs Weigh on Bitcoin
A key factor driving Bitcoin’s underwhelming quarterly performance is the broader macroeconomic landscape, with increasing investor uncertainty surrounding U.S. trade policy. On April 2, newly imposed U.S. trade tariffs are set to take effect - an event that has been dubbed “Liberation Day” by former President Donald Trump. These tariffs, which may impact up to $1.5 trillion worth of U.S. imports, are fueling concerns about economic instability and risk-asset performance.
Despite these headwinds, traditional safe-haven assets such as gold have continued to rally, reaching new all-time highs while Bitcoin has struggled to maintain its momentum. The market’s risk-off sentiment has further pressured Bitcoin’s price, with investors opting for assets with a more established store-of-value narrative during times of economic uncertainty.
Technical Indicators Signal Potential Market Weakness
Bitcoin’s price action has painted a mixed technical picture heading into Q2. The cryptocurrency recently formed a “bearish engulfing” pattern on the weekly chart - an indicator that often precedes further downside movement. Market analysts are closely watching key support levels around $80,000, as a breach below this psychological threshold could trigger a larger sell-off.
Additionally, concerns are mounting over the appearance of a potential “death cross” in Bitcoin’s correlation with U.S. stock markets. This technical pattern, which occurs when short-term moving averages fall below long-term averages, has historically signaled downturns in risk assets. However, some analysts argue that these patterns can also coincide with market bottoms, offering a potential buying opportunity if sentiment shifts in the coming weeks.
Bitcoin’s Market Profitability Signals Further Caution
On-chain data is also flashing cautionary signals, with Bitcoin’s market-value-to-realized-value (MVRV) ratio returning to its long-term historical average. This metric, which assesses whether Bitcoin is overvalued or undervalued based on investor profitability, recently printed a “death cross” of its own. Previous instances of this pattern have been followed by price declines, reinforcing concerns that the market may still face downside risk before stabilizing.
Despite the drawdown, Bitcoin’s price correction remains within historical norms for a bull market cycle. Previous market cycles have seen corrections of up to 60%, suggesting that while the recent downturn has been notable, it does not necessarily indicate the end of the broader uptrend.
Coinbase Premium Hints at Possible Market Rebound
While the broader market remains uncertain, some traders are eyeing a potential reversal as selling pressure begins to subside. The Coinbase Premium - a metric that tracks the price difference between Bitcoin on U.S.-based Coinbase and Binance - has shown signs of resilience despite recent volatility. Historically, a rising premium has been associated with growing institutional interest and a renewed bullish sentiment among U.S. investors.
Although the premium remains near neutral levels, its stability suggests that panic selling may be easing, opening the door for a potential recovery if macroeconomic conditions improve. Market participants are now looking ahead to Federal Reserve Chair Jerome Powell’s upcoming speech on April 4, which could provide further insight into the Fed’s stance on inflation and interest rate policy - key factors that could influence Bitcoin’s trajectory in the months ahead.
Q2 Outlook: Bitcoin Faces Pivotal Moment
As Bitcoin exits a lackluster Q1, the coming months will be critical in determining whether the cryptocurrency can regain its upward momentum. With macroeconomic uncertainties, evolving trade policies, and technical indicators signaling both caution and opportunity, Bitcoin traders remain on high alert for the next major move.
While Bitcoin’s 13% quarterly decline marks its worst Q1 since 2018, historical trends suggest that the digital asset has often rebounded strongly from similar corrections. As traditional markets digest economic developments, all eyes remain on Bitcoin’s ability to defend key support levels and reassert itself as a leading store of value in an increasingly uncertain financial landscape.