The first quarter of 2025 served as a stark reminder that the world of digital assets is nuanced and subject to external pressures. Initially, the year sparked optimism among investors, particularly with the election of a pro-crypto U.S. president and expectations of a more favorable regulatory landscape. However, the prevailing macroeconomic challenges quickly shifted the focus from optimism to caution.
Bitcoin briefly reached a staggering all-time high of $109,356, only to finish the quarter down 11.6%. This marked its second-largest quarterly decline since Q2 2022. Altcoins, particularly those represented in indices such as the CoinDesk Memecoin Index (CDMEME) and the CoinDesk 80 (CD80), experienced even more significant downturns—declining by 55.2% and 46.4%, respectively.
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Underneath these fluctuations lies a more profound realignment within the industry. The gap between Bitcoin and other cryptocurrencies has continued to widen, largely driven by institutional behavior. As highlighted in our latest Digital Assets Quarterly Report, institutions are increasingly favoring liquid and regulated large-cap assets. This transition is steering the digital asset marketplace towards more structured and benchmark-driven investment strategies.
A key indicator of this shift is Bitcoin’s dominance, which reflects its market capitalization as a percentage of the total cryptocurrency market. This figure rose to 62.2% in Q1, marking its highest level since February 2021. Surprisingly, this rise occurred despite a 26.9% decline in Bitcoin’s total market cap since its January peak. Our latest chart of the week underscores this trend, illustrating how investor capital pivoted from speculative assets to Bitcoin amidst rising macro volatility and geopolitical uncertainties.
The CoinDesk 20 Index (CD20) has become an essential tool for observing this institutional transition. Although the index fell by 23.2% in Q1, it significantly outperformed many other prominent digital assets. XRP was the only constituent of the CD20 to achieve a positive return, rising by 0.4% due to the dismissal of the SEC’s case against Ripple and impressive growth in its RLUSD stablecoin. The market cap for RLUSD surged an astonishing 323% in Q1, hitting $245 million, with cumulative trading volumes exceeding $10 billion within just three months.
In contrast, Ethereum (ETH) faced a substantial decline of 45.3%, falling behind other leading assets. This decline was attributed to a continued migration of user activity to Layer 2 solutions, compounded by a lack of supporting catalysts. While U.S. spot ETH ETFs saw net outflows of $228 million in Q1, Bitcoin ETFs enjoyed net inflows exceeding $1 billion. Consequently, the ETH/BTC ratio dropped to 0.022, its lowest level since May 2020, further highlighting this cycle’s shifting dominance.
The role of Bitcoin as a macro asset also continued to gain prominence. Not only did strong ETF flows bolster its market presence, but public companies collectively added nearly 100,000 BTC to their portfolios in Q1—an increase of 34.7%. This raised their total holdings to 689,059 BTC, valued at over $56.4 billion at current prices. The formation of the U.S. Strategic Bitcoin Reserve and the introduction of a broader Digital Asset Stockpile by the Treasury underscore Bitcoin’s growing acceptability within U.S. policy frameworks.
Looking forward to Q2, market sentiment appears to have recovered following a pause in new tariff measures, generating a positive response among risk assets. Anticipation surrounding altcoin ETFs remains high, with nearly 40 spot ETF applications for various altcoins submitted in Q1 alone. Notably, applications for Solana and XRP led the pack, each garnering eight filings. Other notable assets included Litecoin, Dogecoin, and Polkadot, with Solana futures now up and running on the CME, preparing the ground for institutional-grade altcoin exposure.
The first quarter has served as a significant reminder that digital assets now exist within a larger economic framework. As macro conditions evolve and regulatory policies shift, capital is redistributing itself towards assets that offer deeper liquidity, compelling narratives, and institutional relevance. Bitcoin’s rising dominance and the fluctuating performance of altcoins indicate a market that is recalibrating based on structural forces rather than mere sentiment.
For an in-depth analysis of these evolving dynamics, including comprehensive index performance and insights on constituents, access the full Digital Assets Quarterly Report here.
