BTC Drops 11.7% in Q1 2025, Its Worst First Quarter Since 2015

#BTC #Trump #ETF
In the first quarter of 2025, BTC ended with negative growth, marking its worst quarterly performance in the past decade. Despite substantial accumulation by corporate entities such as Strategy, Tether, and Metaplanet, Bitcoin's market cap still shrank by nearly 12% from January to March.
According to analysis from CryptoQuant, the market downturn may be related to long-term holders selling and ETF capital outflows. In Q1, long-term holders reduced their BTC holdings by approximately 178,000 BTC, offsetting the bullish momentum brought by institutional accumulation. Meanwhile, Bitcoin ETFs saw capital outflows of at least $4.8 billion during the same period. Whether BTC will end Q2 on a positive note remains to be seen.

Trump's policies boost optimistic expectations for BTC
During his presidency and through recent policy adjustments, the Trump administration has repeatedly signaled a relatively lenient regulatory stance on crypto assets. This policy direction has inspired optimism among some investors in the crypto market. For starters, Trump has publicly expressed interest in blockchain technology, and his team has shown support for financial innovation. In early 2025, certain policy advisories issued by relevant departments hinted at encouraging fintech innovation under the premise of reasonable regulation - injecting positive sentiment into the market.
Such policy signals led both retail and institutional investors to believe that the future regulatory environment could become more relaxed, thereby boosting long-term bullish expectations for BTC. Many investors believe that even though the market may be highly volatile in the short term, policy benefits will gradually emerge in the future, driving a rational upward trend in Bitcoin's price. Based on this assumption, some speculative and long-term asset allocation capital is attempting to accumulate BTC at lower levels, planting seeds for the next bull market.
In addition, another aspect of Trump's policy is a tendency to "decentralize" the U.S. financial system. Some interpretations suggest that this could lead more capital to seek safe havens to hedge traditional financial risks. Bitcoin, as digital gold with scarcity and decentralization, becomes a key target for such capital. As a result, there are quite a few investors in the market who follow the strategy of "buying the dip and waiting for policy support," actively trading BTC in hopes of capturing outsized gains from future policy shifts.
Driven by this optimistic expectation, BTC once surged to a historical high of $10,950. However, after reaching its peak, BTC's price continued to decline, nearly returning to pre-surge levels.
Uncertainty in Trump's policies intensified market volatility
While Trump's policies did help lift market sentiment to a certain extent, their uncertainty also became a major catalyst for volatility. Trump's inherently unpredictable governing style has raised many concerns over his policy direction. Recently, several policy signals related to crypto regulation and cross-border capital flows failed to provide clear guidance, instead creating a wide range of interpretations.
Against this backdrop, investors found it difficult to accurately judge policy trends, leading to inconsistent and fluctuating sentiments. When major announcements or rumors emerged, the market quickly split: some investors remained hopeful for "policy dividends," while others worried that changes could bring stricter regulations. This divergence in expectations caused Bitcoin to undergo frequent and severe short-term fluctuations.
Among all these policies, the introduction of reciprocal tariffs has undoubtedly been the biggest shock to the market. Although the tariff policy officially took effect in Q2 (early April 2025), the announcements began appearing in March - reminding us that the market always reacts ahead of reality.
Market downturn likely linked to long-term holder sell-offs and ETF capital outflows
Beyond policy factors, another key reason for the market downturn is the collective offloading by long-term holders and the significant capital outflows from ETF products. Data shows that in Q1 2025, long-term holders reduced their BTC holdings by approximately 178,000 coins. This figure is particularly noteworthy because, while institutional players were increasing their positions, retail and some long-term capital chose to exit, reflecting doubts about the future market trend.
At the same time, Bitcoin ETFs experienced large-scale withdrawals in the same quarter, with total outflows reaching at least $4.8 billion. This phenomenon indicates that institutional capital has grown more sensitive to risk and prefers liquidity over exposure amid an uncertain outlook, aiming to avoid potential downturns. The capital outflows from ETFs not only impacted BTC market liquidity but also intensified selling pressure, further accelerating price declines.
Broadly speaking, the sell-off by long-term holders and ETF redemptions are mutually reinforcing, underscoring overall market anxiety about future trends. Compared to newly-entered speculative funds, changes in the holdings of large-scale long-term and institutional investors have a more profound impact on the market. This directly contributed to Bitcoin's significant market cap loss in Q1, making it the worst quarter since 2015.
Conclusion
In summary, Bitcoin's 11.7% price drop in Q1 2025 was the result of combined factors: policy uncertainty and mismatched capital flows. Trump's policies provided some positive signals that attracted investor optimism about Bitcoin's future; however, the ambiguity in policy execution and frequent signs of potential changes stirred intense market volatility. Long-term holders reduced their positions, and ETFs saw massive withdrawals, leaving the market without strong support and facing severe downward pressure.
These developments reveal that in today's complex and ever-changing global macroeconomic and policy environment, Bitcoin and the broader crypto market are undergoing a profound structural adjustment. Looking ahead, as policy signals become clearer and capital reallocates, the market may show a more positive outlook in Q2. But for now, investors need to stay focused on risk management and respond rationally to an ever-evolving market landscape.