4 Catalysts That Could Spark a Crypto Rebound in Q2 After a Rough Start to 2025

4 Catalysts That Could Spark a Crypto Rebound in Q2 After a Rough Start to 2025

The crypto market just closed out one of its most unexpectedly disappointing first quarters in recent memory. Despite a surge in mainstream adoption and notable industry developments, Q1 2025 saw both Bitcoin (BTC) and Ether (ETH) post rare declines—an unusual outcome given the quarter’s historically strong track record.

Bitwise CIO Matt Hougan described it bluntly in a recent market report:

“Frustrating. That’s the best word to describe the past quarter… It was the best worst quarter in crypto’s history.”

According to CoinGlass data, Q1 has historically been Bitcoin’s second-best quarter (averaging +51.2%) and Ether’s best (averaging +77.4%). Yet in Q1 2025, Bitcoin fell by 11.82% and Ether plunged 45.41%.

Still, Hougan and other analysts remain optimistic that Q2 could turn things around, citing four emerging catalysts that could breathe new life into the market.

Historically, Q1 2025 is the second-best performing quarter for Bitcoin on average, but it’s the best for Ether. Source: CoinGlass

1. Global Liquidity Is Expanding Again

One of the most promising signals is the shift in global monetary policy. After several years of tightening, central banks around the world are now leaning toward monetary easing and money supply expansion (M2 growth).

“Historically, these conditions have been favorable for risk assets, particularly for digital assets,” said Hougan.

Supporting this, on April 14, analyst Colin Talks Crypto noted that global M2 remained at an all-time high for three consecutive days. Economist Lyn Alden previously reported that Bitcoin tends to follow the direction of global M2 about 83% of the time—suggesting that more liquidity could mean more upside for BTC.

2. Regulatory Clarity Is Gaining Ground

While the spotlight has largely focused on regulations’ short-term impact on crypto, Hougan believes a "quiet clean sweep" of pro-crypto regulations in the U.S. is laying the groundwork for long-term growth.

“This is the long tail of regulatory clarity that no one is talking about, and it’s just getting started,” he explained.

With more defined legal frameworks, institutional investors may finally feel confident enough to ramp up their crypto exposure—especially in a market searching for stability.

3. Stablecoin Growth Signals Market Readiness

Another under-the-radar bullish signal: the surge in stablecoin assets under management, which topped $218 billion in Q1—a new record.

“Growing stablecoin adoption will benefit adjacent sectors, including DeFi and other crypto applications,” said Hougan. A rise in stablecoins often indicates increased capital on the sidelines, ready to be deployed into crypto markets once sentiment shifts.

BTC/USD vs global M2 supply. Source: Colin Talks Crypto

4. Geopolitical Tensions Could Boost Bitcoin’s Appeal

Uncertainty in global markets may also work in crypto’s favor. Q1 saw escalating geopolitical tensions—particularly following President Donald Trump’s re-election and the introduction of new tariffs—which are pushing global investors to reassess risk and seek alternatives to traditional financial systems.

Crypto, particularly Bitcoin, is often seen as a hedge in such times. As Hougan puts it, the macro backdrop could “accelerate crypto adoption as investors search for decentralized and inflation-resistant assets.”

Looking Ahead: Could Bitcoin Still Hit $200K?

Despite the slow start to the year, Hougan remains bullish on Bitcoin’s long-term trajectory. In December 2024, Bitwise predicted BTC could hit $200,000 by year-end—a potential 138% increase from current levels.

“I still think that’s in play,” Hougan reaffirmed.

Crypto exchange Coinbase echoed a similar sentiment, stating that while Q1 sentiment was shaky, “when the sentiment finally resets, it’s likely to happen rather quickly,” and they remain optimistic for the second half of 2025.

With macro forces aligning and several fundamental tailwinds building, Q2 could be the turning point the crypto market needs.