Since hitting an all-time high last October, Bitcoin has lost almost half its value. As it continues to struggle below $70,000, the weakness is fueling fears of a new crypto winter.
But despite continued market volatility, retail activity on Coinbase has remained stable, according to Brian Armstrong.
Post-October recession
In a recent tweet, Coinbase’s chief executive said that the platform’s data shows that retail users continued to buy despite falling prices, while holdings of native units on Bitcoin and Ethereum increased. Armstrong added that a majority of retail customers held balances in February at or above their December levels, with small investor participation on Coinbase remaining stable.
Even though the retail business appears resilient, market commentator Mippo warned that the overall market outlook remains fragile. Mippo said current conditions indicate the start of a “full crypto winter,” which could potentially match the severity of the 2022 bear market or even the downturn seen in 2019. He attributed the near-term pressure to the “air gap” created by previously unsustainable valuations alongside a changing regulatory environment.
He said historical valuations of cryptocurrencies were largely driven by speculative capital flows rather than business fundamentals, as regulatory uncertainty made it difficult for projects to generate compliant revenue or cash flow. Prices were often set based on the amount of capital seeking a limited supply of tokens tied to the most popular narratives of the time, and higher-risk themes commanded higher valuations.
According to Mippo, this framework is now breaking down as regulatory pathways for crypto projects become clearer, starting with stablecoins and expected to expand to a wider range of tokens.
While this regulatory change is characterized as positive in the long term, Mippo said it creates challenges for projects whose valuations are based primarily on speculation. As compliant revenue generation becomes possible, he explained that market participants are increasingly focused on cash flow, which has led to a reassessment of token prices that were set too high in previous assumptions. This helps explain why on-chain activity and fundamental usage may increase even as token prices continue to fall, he added.
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AI dominance puts pressure on crypto
Mippo also said that crypto was “absolutely mocked by AI,” while adding that the frenzy around meme coin speculation is catching up with the industry and that crypto has failed to create useful products during this period.
He therefore believes that the valuation review could continue for another nine to eighteen months before overall market conditions begin to improve.
