Coinbase and glassnode predict that the cryptocurrency market will grow positively in Q3/2025, driven by the Fed's interest rate cuts and favorable legal framework.
David Duong, CFA, Head of Research at Coinbase Institutional, along with the glassnode analysis team, recently published a report on the Q3 cryptocurrency market outlook with optimistic forecasts. Experts note three key factors converging to create growth momentum: diminishing economic recession risks, the potential for the Federal Reserve to cut interest rates, and the United States' "market-friendly" policy towards the cryptocurrency industry.
The report emphasizes "unprecedented" legal progress in the first half of 2025, with important stablecoin legislation and a comprehensive regulatory framework for digital assets in the final stage of completion. The trend of businesses incorporating bitcoin into treasury portfolios is considered a significant new source of demand, contributing to market value growth.
Statistical data shows that as of 6/30, bitcoin's dominance ratio reached 64%, nearly touching a four-year high. This reflects a strong capital shift towards top cryptocurrency assets. Notably, US spot bitcoin and ether ETFs recorded a massive net capital inflow of $14.6 billion in Q2, a significant increase from $627 million in Q1.
On-chain indicators reflect positive sentiment
Stablecoin supply has reached a record high of over $230 billion, indicating abundant liquidity awaiting investment opportunities. On-chain indicators also reflect a clear improvement in investor sentiment. Bitcoin's entity-adjusted NUPL index shifted from "Anxiety" to "Belief" in Q2, while the proportion of profitable BTC supply recovered from below 75% to nearly 100%.
Ethereum also shows positive signs with strengthened fundamentals. ETH and layer-two network trading volume increased by 7%, while transaction fees decreased by 39%, creating favorable conditions for ecosystem expansion.
According to Bitwise data, US spot bitcoin ETFs have purchased BTC equivalent to 225% of newly mined bitcoin since January 2024, creating extremely large supply pressure and strong price support. Grayscale also highlights the potential of cryptocurrency sectors related to decentralized artificial intelligence, currently with a market capitalization of around $15 billion.
While acknowledging medium-term systemic risks from leveraged trading activities, Coinbase and glassnode believe these risks are not urgent in the short term. Experts believe the market will not return to 2024 lows unless major disruptions occur, such as more aggressive Fed monetary easing or escalation of global trade tensions and geopolitical conflicts.
