The first quarter of 2025 is a reality check for digital assets. As the year began optimization fueled by the election of a pro-crypto US president and expectations of a more friendly regulatory environment, macroeconomic challenges quickly came to dominate the narrative. Bitcoin briefly reached a new all-time high of $ 109,356 before finishing the quarter down 11.6%, the second largest quarterly decline from Q2 2022.
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Under the surface, a more major shift plays. The gap between Bitcoin and the rest of the market continued to expand, driven by a large portion of the institutional behavior. As outlined in our latest Digital Assets Quarterly ReportInstitutions play an increasingly decisive role in shaping capital flows, preferring liquid and controlling assets with large cap. This shift drives the digital asset market toward more structured, benchmark -driven techniques.
One of the clearest signs of this realignment is derived from Bitcoin’s dominance, which expresses the total capitalization of the Bitcoin market as a percentage of market capitalization for all cryptocurrencies combined. This figure rose to 62.2% in Q1, the highest level since February 2021. Notably, this increase occurred despite a 26.9% collapse in the total capitalization of Bitcoin from the peak of January. Our latest Sunday chart features this trend, showing how the capital of the speculations and Bitcoin are rotated as the macro’s volatility and geopolitical uncertainty mounted.
The CoinDesk 20 Index (CD20) has emerged as a unique -beneficial lens for monitoring the transfer of this institutional. While the index fell 23.2% in Q1, it significantly released most of the major digital assets. The XRP is the only constituent of the CD20 to post a positive return, rising 0.4% in the quarter, driven by the dismissal of the SEC case against Ripple, as well as strong growth in its RLUSD stablecoin. RLUSD’s market cap has climbed 323% in Q1 to reach $ 245 million, while combined -joint trading volume exceeds $ 10 billion in just three months.
Conversely, the ether fell 45.3% – underperforming most of the major ownership amid the continued transfer of user activity to the 2S layer and a lack of positive catalyst. US SPOT ETH ETFS has seen net outflows of $ 228 million in Q1, compared to net inflows of over $ 1 billion for Bitcoin ETFs. The ETH/BTC ratio has refused 0.022, the lowest level since May 2020, strengthening the move to the Kamag -child dominance in this cycle.
Bitcoin’s wider role as a macro asset also continued to gain traction. In addition to the strong ETF flow, public companies added nearly 100,000 BTCs to their Q1 holdings, representing an increase of 34.7%. It brought the total hold of such companies to 689,059 BTC – equivalent to more than $ 56.4 billion at current prices. The launch of the US strategic Bitcoin Reserve, along with the introduction of a broader digital asset stockpile of Treasury, further emphasizes the growing legitimacy of Bitcoin within the US policy.
Looking at Q2, the tone in the markets has improved following the recent pause in new tariff steps. Risk ownership responds well, and the optimism of Altcoin ETF remains high. Nearly 40 ETF applications for altcoins were submitted to Q1 only, led by those for Solana and XRP, each with eight filing. Other possessions applying for ETF spots include Litecoin, Dogecoin and Polkadot. In Solana futures now live in CME, the preceding for institutional exposure to Altcoin continues to build.
The first quarter offers a reminder that digital assets are no longer moving in isolation. As macro conditions change and policy changes begin to reshape environmental regulation, capital is combined with properties with deeper liquidity, stronger narrative and institutional relations. The rising dominance of Bitcoin, ETF shifts are flowing and the destruction of altcoin performance all points to a market that recalibrates around structural factors rather than just emotion.
For a deeper dive into these dynamics, including full index performance and constitutional views, you can access the whole Digital Assets Quarterly Report Here.
