After a tumultuous Q1 2025 in the cryptocurrency market, this change in market share reflects a significant shift in dominant market forces. Bitcoin rallied to record highs, but trouble in Ethereum reverberated throughout the digital asset space. Declining Ethereum performance pushed down the broader decentralized finance (DeFi) sector and changed trading patterns on centralized, decentralized, and off exchange venues.
Bitcoin's Ascent and Ethereum's Decline
Bitcoin demonstrated robust performance in Q1 2025. In January, it soared to an all-time high of $106,182 right around the inauguration. It subsequently plummeted by 11.8%, with the quarter closing at $82,514. Yet, despite the pullback, Bitcoin’s dominance jumped again to 59.1%. We haven’t reached this level since early 2021, a promising sign that the market has turned a corner.
Ethereum faced a challenging quarter. Its price fell sharply, leading to its dominance reaching 7.9%, the lowest level since late 2019. The digital condo crashed 45.3% throughout Q1, completely wiping out all of its 2024 features in the wake of a wider crypto market chaos. This drop tracked with the movement towards Layer 2 solutions and reduced activity on the Ethereum mainnet.
DeFi Sector Impact and Solana's Rise
These issues facing Ethereum caused a cascading effect on the DeFi industry. Total value locked (TVL) in DeFi protocols plummeted to $48.9 billion in Q1, down 27.5%. Ethereum’s share of the DeFi market dropped, ending the quarter at 56.6%.
Solana touted itself as a main contender, especially in the space of decentralized exchange (DEX) trading. As a result, the platform commanded 39.6% of the DEX market share throughout Q1, largely fueled by the newfound meme coin craze. Solana’s ecosystem has proven to be one of the most successful platforms expanded into DEX trading. It’s seizing on a sand-shifting dynamic across the crypto landscape.
Market Capitalization and Trading Volumes
The entire cryptocurrency market saw a significant contraction in Q1 2025. Total market capitalization decreased 18.6% from its mid-January high of $3.8 trillion down to $2.8 trillion. Average daily trading volumes were down, dropping 27.3% to $146 billion, pointing to a dip in general market activity.
Meme coins were responsible for propelling Solana’s DEX trading volume. Their popularity began to taper off as the quarter progressed. Significant market events severely shook investor confidence in meme coins and the entire crypto industry. Confidence took a hit, and that reflected in the numbers. Platforms like pump.fun took a dive, with daily token deployments reduced by more than 56%.
