Bitcoin, the world’s largest cryptocurrency, started in 2025 on an uncertain footing after reaching record highs in the second half of 2024. By early March, after climbing over $100,000 in December, its value had dropped by more than 20%, raising concerns about the stability of the wider market.
This slump has had a ripple effect on the digital asset space, particularly Ethereum, the backbone of the NFT market. Slides in Bitcoin and Ethereum prices raise questions about how the NFT sector will respond. With declining market activity, reduced investor participation and resurfaced environmental concerns, the NFT landscape is facing major challenges.
This decline is attributed to economic instability, regulatory pressures and security incidents that have shaken investors’ trust.
Source: PexelsCurrent forecasts for Bitcoin and Ethereum
Ethereum followed the decline in Bitcoin in early 2025, falling from a January peak of $3,688.61 to around $2,090.61 by March, a downward trend coincides with the Bitcoin struggle, but analysts differ from investors’ sentiment between the two cryptocurrencies. Quoting the historical trends that rebounded after harving the 2017 and 2021 events, we remain optimistic about the potential recovery for Ethereum.
Ethereum’s broader utility in Smart Contracts and Dapps is distinguished from Bitcoin in real use cases in industries such as online gaming and digital transactions. For example, Ethereum Casino reduces processing time, allowing players to deposit their funds, start playing without delay, and withdraw their winnings immediately. Additionally, Ethereum’s support for Smart Contracts enables an automated, empirically fair game experience, ensuring that the game’s outcomes are fair and transparent.
Despite the recession, both Bitcoin and Ethereum continue to be widely used across the industry, including Defi, online payments and digital collectibles.
Source: PexelsWhat factors contribute to the decline in Bitcoin?
In early 2025, economic instability played a key role in the decline in Bitcoin, including a new US policy that introduces 25% tariffs on imports from Canada and Mexico, causing uncertainty in financial markets and leading to a rebound from risky assets such as cryptocurrencies.
At the same time, the Federal Reserve suggested potential interest rate hikes to curb inflation. Historically, such actions have resulted in a decline in investment in digital assets, as investors are seeking more stable assets, such as bonds and gold.
Cybersecurity remains a major issue in the crypto sector as well. For example, in February 2025, the popular cryptocurrency exchange was hacked by $1.5 billion, shaking investors’ trust. Massive Bitcoin sales continued, further contributing to lower prices.
Additionally, institutional investors played a major role in the late 2024 surge in Bitcoin through ETFs. However, in the first quarter of 2025, ETFs were seen outflowing more than $1.1 billion, weakening institutional trust in Bitcoin and putting downward pressure on asset prices.
How does this have an impact on the overall market?
As Bitcoin and Ethereum prices fell, the NFT market also saw a decline in activity. Analysts project a decline of approximately $75 million in NFT market revenues in 2025, reflecting a decline in speculative interest and investor attention. The number of active NFT wallets has also been steadily decreasing for three years, and this trend continues in 2025. Casual investors are out of the market and leave a smaller base for dedicated traders and institutional participants.
The bitcoin slump has also rekindled debates over the environmental impact of blockchain technology, with some companies and investors reconsidering their involvement in NFTs due to concerns about the high energy consumption of blockchains.
Several NFT projects and companies are also feeling the impact of the Bitcoin recession. For example, RTFKT announced its closure in early 2025, highlighting the struggles facing NFT-based brands. Developers of blockchain-based games, including Axie Infinity and Otherside, are reducing operational costs as demand for in-game NFT assets has declined, while major NFT markets such as Opensea and Blur have reported a decline in trading volume. Established collections like the boring APE Yacht Club (BAYC) retain some market value, but small NFT projects face difficulties in attracting buyers.
Bitcoin’s volatility is a known feature, and its recent decline does not necessarily indicate a long-term collapse with those who believe that Bitcoin could recover in the second half of 2025 if the economic situation stabilizes and investors’ feelings improve. The speculative boom will be slower and projects focused on real-world applications may have high chances of long-term survival, but whether NFTs can survive the Bitcoin recession will depend on how the sector adapts to evolving investor demand and market conditions.
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