According to the Kaiko report for the first quarter of 2025 cited by The Block on the 10th (local time), Donald Trump's sudden tariff policy gave a strong shock to the cryptocurrency market, and the trading volume of major cryptocurrencies, including Bitcoin and Ethereum, returned to pre-election levels. The weekly average trading volume was approximately $26.6 billion, a decrease of about 30% compared to the previous quarter. In particular, the decline in overseas exchange activities and the contraction of altcoin demand were cited as major reasons.
Kaiko analyzed that Bitcoin volatility rose from 34% in February to 51% in March, and some altcoins recorded their highest volatility levels. Cardano (ADA) was specifically mentioned as a case of volatility surge. This created an atmosphere where risk-averse investors were hesitant to enter the market.
In terms of asset performance, Bitcoin showed lower performance than US stocks and gold, but performed better than AI-themed or meme coins. BTC declined by about 12% in the first quarter, while AI and meme coins dropped by an average of over 50%. Kaiko pointed out that "the expectation of interest rate cuts is not the market cycle desired, and the risk-averse atmosphere is affecting the market overall".
In terms of market liquidity, US-based exchanges were analyzed to be firmly supporting the Bitcoin market. Exchanges such as CEX.IO, Kraken, and Coinbase are responsible for more than 60% of global BTC market liquidity, which increases stability compared to the altcoin market. In contrast, altcoin liquidity decreased by more than 30% in the first quarter, showing a tendency to concentrate on top market capitalization assets.
In the options market, immediately after Trump's tariff announcement, Bitcoin's short-term volatility (ATM IV) reached its highest level since 2024. However, the options market still shows a predominance of call option trading, indicating that investment sentiment has not completely collapsed.
The outlook for the second quarter is somewhat positive. Kaiko stated that the launch of altcoin ETFs, finalization of stablecoin regulations, and clarification of Trump administration's trade policies could act as upward factors. In particular, the new SEC Chairman Paul Atkins shows a pro-cryptocurrency tendency, and a forward-looking review of more than 40 pending ETF applications is expected.
The stablecoin market is also continuing its growth trend. Recording a supply of over $230 billion, a 33% increase compared to the end of 2024, Kaiko added that this could be interpreted as a precursor to a market rebound, as it has historically served as a leading indicator of asset market rises.
The White House decided to defer the tariff policy announced on the so-called 'Liberation Day' on April 2nd for 90 days, which led to a temporary relief rally in the market. The European Union also followed suit with a tariff deferral but maintained tension by warning of potential retaliation if negotiations break down.
Kaiko analyst Dessislava Aubert said, "If regulatory clarity and institutionalization continue, Bitcoin can begin decoupling from traditional assets," and "Dollar weakness can act as a factor strengthening the BTC narrative".
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