At the start of 2025, the cryptocurrency market was poised for another boom. Its initial implementation went off the rails in an unforeseen way in the first quarter. This downward trajectory resulted in a significant decrease in Total Value Locked (TVL) across the Decentralized Finance (DeFi) Industry. To make matters worse, the entire crypto market cap dropped, a major blow considering past bullish forecasts fueled by expectations for crypto-accommodating government policy.
The market was anticipating that U.S. President Donald Trump’s policies towards cryptocurrency would play a bullish trump card. While the release of rival meme coins TRUMP and MELANIA had already led to a surge in new tokens being released on platforms such as Pump.fun. The rate of token releases on Pump.fun slowed significantly as we got further into the quarter.
DeFi Sector Takes a Hit
The DeFi sector experienced a hard crash. Composite all-blockchain total TVL fell off a cliff from $177.4 billion in the Q4 2024 to a mere $128.6 billion. This is a huge drop that is emblematic of larger struggles throughout the crypto sector.
Solana (SOL) played a major role in the decrease, suffering a 23.5% drop in its TVL this past month. Ethereum continued to bleed total value locked (TVL). It fell from $112.6 billion to $72.7 billion – a loss of 35.4%. Base saw a larger drop of 15.3% in its TVL as well.
Even in the face of this generally grim trend, a few ecosystems saw positive gains. BeraChain, for example, reached $5.2 billion in DeFi TVL within its first quarter post-launch. This growth bolstered its position as the sixth-largest share of TVL. It points to strong pockets of resilience and opportunity amid the larger macro headwinds of the market.
Market Capitalization Plummets
The aggregate crypto market capitalization reflected all this pain, dropping 18.6% to lose $633.5 billion. This drop is indicative of a larger trend seen across the cryptocurrency market—the dramatic decline in value of all assets.
Bitcoin’s dominance level rose to 59.1%, showing the flight to relative safety, even as the rest of the market became more uncertain and jittery.
Bitcoin's Dominance
Despite the Ethereum price action and traditional assets outperforming Bitcoin, Bitcoin’s dominance in the crypto market surged to 59.1%. For many investors, Bitcoin became the safe haven asset they flocked to during these times of uncertainty and volatility. This latest development cements Bitcoin’s status as the leading crypto.
As Bitcoin’s dominance climbs higher, investors are getting more conservative. They are focusing on more established cryptocurrencies over riskier altcoins during uncertain market conditions. This rise in Bitcoin’s dominance indicates a growing risk-off sentiment among investors, choosing to bet on more established assets rather than altcoins.
