The Analysis Company said "Bullish Could Ignite in the Second Quarter," predicting what would happen to altcoins if Bitcoin rises!

The return of US President Donald Trump to the White House initially fueled optimism in the crypto markets and Bitcoin (BTC) reached an all-time high in January, with US stocks following suit.

However, according to the first quarter 2025 report from the blockchain analytics firm Kaiko, Trump's rapid implementation of tariffs brought new uncertainty, triggering volatility and a pullback in trading activities, causing this upward momentum to be short-lived.

Kaiko reported that weekly trading volumes for Bitcoin, Ethereum, and the top 10 altcoins have decreased by 30% compared to the pre-election levels observed in November 2024. The average weekly volume in Q1 was $266 billion. The main reason for this decline was the decrease in demand for altcoins and particularly the cautious risk appetite in offshore exchanges.

Kaiko analysts wrote, "Altcoin volatility surged in early 2025, reaching multi-year or all-time highs for certain tokens, especially Cardano (ADA)," and added: "Bitcoin's volatility also showed a sharp increase, rising from 34% in February to 51% in March."

The widening volatility gap between Bitcoin and altcoins has made some investors more risk-averse and deterred their entry into altcoin markets amid broader macroeconomic concerns.

Despite Bitcoin's dominance, it was not immune to the market turbulence in Q1. BTC lost 12% in value over the quarter, marking its worst performance since 2018, and is currently trading about 25% below its peak in January. Still, it performed better than most altcoins, especially tokens in the artificial intelligence and memecoin sectors, which saw average losses of over 50%.

"While expectations for U.S. rate cuts have increased, this is not the kind of dovish turn that markets had hoped for," said Kaiko analyst Dessislava Aubert, adding: "Risk aversion sentiment has weighed on both stocks and crypto assets."

Despite a turbulent first quarter, analysts believe the second quarter could bring new momentum. Historically, cryptocurrency markets tend to perform better in the second quarter, and several upcoming catalysts could support this trend.

Adam McCarthy from Kaiko highlighted the institutionalization of Bitcoin as a significant trigger. He stated that if the (ETPs) listed products receive regulatory approval, altcoins could similarly benefit. Currently, over 40 ETF applications related to cryptocurrency are awaiting review by the new SEC Chair, Paul Atkins, and his team.

McCarthy said, "If there is going to be a bull run in the second half of 2025, altcoins will also need to see similar buying." He added, "The launch of ETFs and other investment products could significantly increase demand."

The expanding stablecoin ecosystem is another promising signal. The total supply of stablecoins has increased by 33% since the end of 2024, surpassing $230 billion. Kaiko noted that the growth in this segment, dominated by USDT and USDC, usually precedes rallies in the broader crypto markets.

Kaiko analysts concluded that ongoing policy clarity and macroeconomic downturn, along with a potentially weaker US dollar, could help Bitcoin diverge from traditional assets in the coming months.