Ethereum signals Q2 recovery potential as Bitcoin nears breakout territory, CMC reports.
CoinMarketCap's research division, CMC Research, projects potential recovery for Ethereum and continued resilience for Bitcoin in Q2 2025, despite both cryptocurrencies closing the first quarter in negative territory.`
Ethereum suffered a devastating Q1, plunging 43.85% in what CMC describes as its "steepest quarterly loss since 2018." This decline followed an overheated rally in late 2024 and was compounded by February's Bybit hack that resulted in approximately $1.5 billion in stolen ETH.
Source: According to CMC Q1 2025
Bitcoin showed comparative stability, ending Q1 down 10.52%, breaking its streak of strong first quarters seen in both 2023 and 2024.
"Q1 2025 closed with both Bitcoin and Ethereum in the red, but it's ETH that's licking its wounds after a brutal -43.85% drop — its worst quarter since 2018," said Alice Liu, CMC Head of Research. "The Bybit hack, postponed Pectra upgrade, and weeks of ETH ETF outflows shattered investor confidence. But herein lies the contrarian opportunity."
The crypto market experienced extreme volatility throughout Q1, with the CMC Fear & Greed Index hitting a yearly low of 15 on March 11, reflecting persistent negative sentiment despite Bitcoin prices holding above $78K-$80K.
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Source: CMC Fear and Greed Index
Alice noted, "Historically, ETH thrives in Q2, boasting a median return of +15.29%. With sentiment still in the gutter and volatility still elevated, Ethereum is entering Q2 as a classic mean-reversion play."
Two potential catalysts for Ethereum's rebound were identified: Ethereum spot ETF flows and renewed interest in Layer-2 scaling solutions.
For Bitcoin, maintaining support above $80K could pave the way for a Q2 breakout, potentially triggered by improved macro conditions, continued ETF inflows, or volatility compression.
"As for BTC, while it ended Q1 with a rare negative print, its resilience amid market panic is telling," Alice explained. "Despite fear dominating sentiment, Bitcoin maintained structural support levels, suggesting consolidation, not capitulation."
The total crypto market capitalization fell by over 17% in Q1 to $2.67 trillion.
Bitcoin dominance remained high at 61%, though the Altcoin Season Index showed a slight uptick from its March low, suggesting early-stage capital rotation could be starting if Bitcoin stabilizes and regulatory catalysts materialize.
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