The digital assets and blockchain ecosystem in early 2025 has experienced considerable volatility and it has been impacted by global economic / political uncertainty as well, based on insights drawn from CoinGecko’s 2025 Q1 Crypto Industry Report and Sumsub’s Crypto Industry Report 2025.
These research reports reveal a picture of a market grappling with volatility, regulatory advancements, and shifting investor sentiment, offering a view of the web3 industry’s current state and future (potential) trajectory.
CoinGecko’s report highlights a stark contrast to the euphoria of late 2024, with the total crypto market capitalization plummeting 18.6% in Q1 2025 to $2.8 trillion from a peak of $3.8 trillion on January 18, just before President Donald Trump’s inauguration.
Bitcoin (BTC), despite hitting a new all-time high of nearly $110,000 on January 22, ended the quarter at $82,514, down 11.8%.
Ethereum (ETH) faced a steeper decline, dropping 45.3% to $1,805 from $3,336, erasing all its 2024 gains.
Altcoins suffered even more, contributing to Bitcoin’s dominance rising to 59.1%, a level unseen since early 2021.
Trading volumes also took a hit, falling 27.3% quarter-on-quarter to $146 billion, reflecting reduced investor activity amidst global economic uncertainties, including U.S. tariff concerns and a strengthening Japanese yen (+5.2%) and euro (+4.5%) against the dollar.
The report delves into sector-specific trends, noting a 27.5% drop in decentralized finance (DeFi) total value locked (TVL) to $48.9 billion, signaling caution among investors.
Non-fungible tokens (NFTs) and meme coins also struggled, with daily token deployments on platforms like Pump.fun plummeting 56.3% after the Libra incident.
Centralized exchanges (CEX) saw spot trading volumes decline 16.3% to $5.4 trillion, while Solana maintained its lead in on-chain decentralized exchange (DEX) trades, accounting for 39.6% of all trades.
Gold (+18%) outperformed crypto, underscoring a flight to safer assets amid market turmoil.
Meanwhile, the EU’s Regulation (EU) 2023/1113 (Travel Rule), effective December 30, 2024, harmonizes requirements for crypto-asset transfers, with the European Banking Authority issuing clarifying guidelines.
Other jurisdictions, like Turkey and Argentina, are aligning with these standards, reflecting a global push for oversight.
Sumsub’s 2024 Crypto Industry Research Survey reveals that 60% of crypto businesses anticipate stricter regulations in 2025, driven by concerns over financial stability, consumer protection, and market integrity.
The report also highlights innovation hubs like Switzerland’s Crypto Valley, where robust regulations, specialized banking (e.g., SEBA, Sygnum), and academic support from ETH Zurich foster blockchain growth.
Stablecoins are gaining traction, serving retail in developing markets and wholesale in developed ones, while programmable money and AI-driven autonomous agents signal deeper integration with traditional finance (TradFi) and fintech.
Post-U.S. election optimism, fueled by institutional adoption, suggests a somewht bullish outlook for 2025 (although bearish trends currently persis), particularly in jurisdictions with early regulatory frameworks like Asia and the Middle East.
These research reports underscore a web3 and crypto industry at a crossroads: navigating market corrections and regulatory maturation while poised for significant institutional growth and adoption in the coming years.