- Crypto markets had a tough Q1 2025, but factors like rising global money supply, pro-crypto regulations, and stablecoin growth could boost prices in Q2.
- Experts remain optimistic, with some predicting Bitcoin could reach $200,000 by the end of the year.
The crypto market may have just closed out its “best worst quarter” in recent memory, but signs point to a potentially brighter Q2. Despite Q1 2025 being historically favorable for Bitcoin and Ether, both major cryptocurrencies ended the quarter deep in the red — Bitcoin fell 11.82%, while Ether plummeted 45.41%.
“This was the best worst quarter in crypto’s history,” said Matt Hougan, chief investment officer at Bitwise, summing up the frustration felt across the market. But despite the rough start, Hougan believes several key developments could reignite investor confidence and turn the tide in Q2.
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1. Global Money Supply on the Rise
Central banks across the globe are slowly shifting from tight monetary policy to easing, expanding the global M2 money supply. “Historically, these conditions have been favorable for risk assets, particularly digital assets,” Hougan noted. Crypto tends to follow the direction of global M2 about 83% of the time, according to economist Lyn Alden.
2. Pro-Crypto Regulation Gaining Ground
Regulatory clarity in the U.S. is another underappreciated bullish signal, Hougan said. A “clean sweep of pro-regulations” could pave the way for institutional adoption and stronger infrastructure — the kind of long-term foundation investors crave.
3. Surge in Stablecoin Adoption
Stablecoin assets under management hit an all-time high of over $218 billion in Q1, a sign of growing investor trust and liquidity in the ecosystem. “Growing stablecoin adoption will benefit adjacent sectors, including DeFi and other crypto applications,” Hougan added.
4. Geopolitical Uncertainty Driving Portfolio Shifts
With geopolitical chaos escalating — particularly following President Trump’s return and new tariffs — global investors are rethinking their asset allocations. Crypto, often seen as a hedge in turbulent times, could benefit from this pivot.
Despite the rocky Q1, the outlook isn’t all doom and gloom. Hougan still believes Bitcoin could hit $200,000 by year’s end — a 138% gain from current levels. And as Coinbase recently noted, “When the sentiment finally resets, it’s likely to happen rather quickly.”
