Ethereum Signals Q2 Recovery Potential as Bitcoin Approaches Breakout Zone
CoinMarketCap’s research division, CMC Research, has forecasted a potential rebound for Ethereum and ongoing stability for Bitcoin in the second quarter of 2025, despite both cryptocurrencies finishing the first quarter in a downturn. Ethereum faced a challenging first quarter, plummeting 43.85%, which CMC characterizes as its most significant quarterly decline since 2018. This drop followed an excessive rally in late 2024 and was exacerbated by a February hack on Bybit, resulting in around $1.5 billion worth of stolen ETH.
Ethereum’s steep decline was in stark contrast to Bitcoin, which displayed relative stability with only a 10.52% decrease, breaking a trend of strong first quarters observed in both 2023 and 2024. Alice Liu, the Head of Research at CMC, stated, “While Q1 2025 ended with both Bitcoin and Ethereum in the negative, it is Ethereum that is facing the harshest reality after a staggering -43.85% fall—its worst performance since 2018. Factors such as the Bybit hack, delays in the Pectra upgrade, and significant ETH ETF outflows have shaken investor confidence. Nevertheless, this situation presents a contrarian opportunity.”
Throughout the first quarter, the cryptocurrency market was marked by extreme volatility, with the CMC Fear & Greed Index reaching a yearly low of 15 on March 11. This indicated a consistent negative sentiment, even as Bitcoin prices remained above the $78,000 to $80,000 range. Liu remarked, “Historically, Ethereum tends to perform well in Q2, showcasing a median return of +15.29%. With overall sentiment remaining low and volatility high, Ethereum is poised to enter Q2 as a classic mean-reversion play.”
Two key factors that could drive Ethereum’s recovery have been identified: the flow of Ethereum spot ETFs and a resurgence in interest surrounding Layer-2 scaling solutions. For Bitcoin, sustaining support above the $80,000 mark may facilitate a breakout in Q2, possibly driven by improved macroeconomic conditions, ongoing ETF inflows, or a reduction in volatility.
Liu further added, “Even though Bitcoin finished Q1 with an unusual negative outcome, its ability to hold firm during market turmoil is significant. Despite the prevailing fear, Bitcoin has maintained crucial support levels, indicating a phase of consolidation rather than capitulation.” The overall cryptocurrency market capitalization declined by over 17% during Q1, settling at $2.67 trillion. Bitcoin’s dominance remained substantial at 61%, while the Altcoin Season Index showed a slight increase from its March low, indicating that early-stage capital rotation may be beginning if Bitcoin stabilizes and regulatory developments come to fruition.
