Bitcoin, the world’s largest cryptocurrency, started 2025 on uncertain footing after reaching record highs in late 2024. By early March, its value had dropped by more than 20% after climbing past $100,00 in December, raising concerns about broader market stability.
This downturn has had ripple effects across the digital asset space, particularly on Ethereum—the backbone of the NFT market. As Bitcoin and Ethereum prices slide, questions arise about how the NFT sector will respond. With declining market activity, shrinking investor participation, and environmental concerns resurfacing, the NFT landscape faces significant challenges.
The decline has been attributed to economic instability, regulatory pressures, and security incidents that have shaken investor confidence.
Source: PexelsCurrent Predictions on Bitcoin vs. Ethereum
Ethereum followed Bitcoin’s decline in early 2025, dropping from a high of $3,688.61 in January to approximately $2,090.61 by March but whilst this downward trend aligns with Bitcoin’s struggles, analysts note differing investor sentiment between the two cryptocurrencies. Some remain optimistic about Ethereum’s potential for recovery, citing historical trends where it rebounded after Bitcoin halving events in 2017 and 2021.
Ethereum’s broader utility in smart contracts and dApps also distinguishes it from Bitcoin, with real-world use cases in industries such as online gaming and digital transactions. At an Ethereum casino, for example, faster processing times allow players to deposit funds, start playing without delay, and withdraw winnings promptly. In addition, Ethereum’s support for smart contracts enables automated and provably fair gaming experiences, ensuring that game outcomes are fair and transparent.
Despite the downturn, both Bitcoin and Ethereum continue to be widely used across industries, including DeFi, online payments, and digital collectibles.
Source: PexelsWhat are the factors contributing to Bitcoin’s decline?
In early 2025, economic instability played a key role in Bitcoin’s decline such as a new U.S. policy introducing a 25% tariff on imports from Canada and Mexico caused uncertainty in financial markets, leading to a pullback from riskier assets like cryptocurrencies.
At the same time, the Federal Reserve hinted at potential interest rate hikes to curb inflation. Historically, such actions have resulted in lower investment in digital assets, as investors seek more stable assets such as bonds and gold.
Cybersecurity also remains a major issue in the crypto sector. For instance, in February 2025, a popular cryptocurrency exchange suffered a $1.5 billion hack, shaking investor confidence. Large-scale Bitcoin sell-offs followed, contributing further to its price decline.
Additionally, Institutional investors played a major role in Bitcoin’s late-2024 surge through ETFs. However, in Q1 2025, ETFs have seen outflows exceeding $1.1 billion, indicating that institutional confidence in Bitcoin has weakened and added downward pressure on the asset’s price.
How is this impacting the overall market?
As Bitcoin and Ethereum prices drop, the NFT market has also seen a decline in activity. Analysts predict a decrease of approximately $75 million in NFT marketplace revenues in 2025, reflecting reduced speculative interest and investor caution. The number of active NFT wallets has also been steadily declining for three years, with 2025 continuing this trend. Casual investors are exiting the market, leaving behind a smaller base of dedicated traders and institutional participants.
Bitcoin’s downturn also reignited debates over the environmental impact of blockchain technology and some businesses and investors are reconsidering their involvement in NFTs due to concerns about the high energy consumption of proof-of-work blockchains.
Several NFT projects and companies have also felt the effects of Bitcoin’s downturn. For example, RTFKT has announced its closure in early 2025, underscoring the struggles faced by NFT-based brands. Developers of blockchain-based games, including Axie Infinity and Otherside, are reducing operational costs due to waning demand for in-game NFT assets, and leading NFT marketplaces such as OpenSea and Blur have reported a drop in trading volumes. Whilst established collections like Bored Ape Yacht Club (BAYC) retain some market value, smaller NFT projects are facing difficulty in attracting buyers.
Bitcoin’s volatility is a known characteristic, and its recent decline does not necessarily indicate a long-term collapse with some believing that Bitcoin could recover later in 2025 if economic conditions stabilize and investor sentiment improves. The speculative boom has slowed, and projects focusing on practical applications may have better chances of long-term survival but whether NFTs can weather Bitcoin’s downturn will depend on how the sector adapts to evolving investor demands and market conditions.
