As a seasoned analyst with over two decades of market experience under my belt, I find myself intrigued by the potential rally of Ether (ETH) in Q1 2025. The historical data suggests a pattern where Ether has shown remarkable growth following a US election and Bitcoin halving cycle, outperforming even Bitcoin itself. This trend, if it repeats, could indeed catapult Ether to new heights.
However, I must also address the cautionary voice of 10x Research founder Markus Thielen. His warning of a “hawkish” macro climate in 2025 is not to be dismissed lightly. The potential tightening of monetary policy could indeed slow down market momentum, including that of Ether.
Looking at the current state of the crypto market, with a pullback of 12.1% since the US Federal Reserve’s decision to trim interest rate cuts, it seems Thielen might be onto something. The federal funds rate projected for 2025 could now stop near 3.9%, which could create a less favorable environment for risk-on assets like Bitcoin and Ether.
However, I remain hopeful. If history truly repeats itself, the potential inflows from spot Ether exchange-traded funds could drive a significant rally. And if the new administration indeed issues more crypto-friendly rules and regulations, as predicted by ZX Squared Capital’s CIO, we might just see ETH maxis’ predictions of over $50 billion of net inflows in 2025 coming true.
In the end, as a believer in the power of cryptocurrencies, I can’t help but joke about it: “Don’t bet against Q1 2025… unless you want to find yourself holding a bag full of air!”
In a possible scenario for Q1 2025, Ether might take a leading role if history repeats itself. However, a cautious industry expert advises that a “hawkish” economic environment could potentially hamper the market’s progression.
In the initial three months after a U.S. election and a Bitcoin halving event, Ether (ETH) has frequently had its strongest quarters, with Q1 2017 and Q1 2021 being notable examples where it surged by 518% and 161%, respectively, according to Coinglass statistics.
Those returns even outpaced Bitcoin’s (BTC) 11.9% and 103.2% for those quarters.
Among potential positive factors, the surge in Ether exchange-traded funds (ETFs) could be a significant contributor. In fact, these ETFs have experienced inflows for 22 out of the last 24 trading days, totaling over $2.5 billion as reported by Farside Investors. This trend has sparked optimism among Ethereum supporters, leading one to speculate that Ether ETFs could attract a staggering $50 billion in net inflows by the year 2025.
According to the Chief Investment Officer of ZX Squared Capital, a cryptocurrency hedge fund, there is an expectation for significant increases in investments flowing into their fund in the year 2025.
According to CK Zheng, it’s anticipated that inflows into cryptocurrencies will significantly rise in 2025, as the upcoming Trump administration is expected to introduce more favorable policies and guidelines for crypto, potentially leading to a broader growth of the digital asset sector overall.
Don’t bet against Q1 2025
— Quinten | 048.eth (@QuintenFrancois) December 29, 2024
Nonetheless, Markus Thielen, the founder of 10x Research, has presented a more pessimistic outlook, stating that Ether is likely to lag behind and miss establishing a new record high in 2025 under a stern economic environment, as he told CryptoMoon.
2025 may see a more cautious approach from us, as Thielen explained to CryptoMoon. Previous favorable market conditions might not persist due to reduced liquidity, challenging our initial aggressive strategy from past years.
The value of the cryptocurrency market has decreased by approximately 12.1% or $3.41 trillion since the U.S. Federal Reserve’s Federal Open Market Committee reduced their forecasted number of interest rate cuts from five to two during a December 18 meeting.
In a possible shift from previous predictions, the federal funds rate might approach 3.9% by 2025 instead of the initially anticipated 3.4%. This change could potentially create a less advantageous market situation for speculative assets such as Bitcoin and Ether.
However, Thielen remains optimistic about Bitcoin’s potential, suggesting it could still hit $160,000 in an ideal scenario. Yet, he also forecasts that it might dip to around $125,000 before finding a steady level of equilibrium.
At present, Bitcoin is being bought and sold for approximately $93,492. In contrast, Ether is valued at around $3,997. Over the past day, Ether has experienced a slight increase of 0.6%. However, it remains 30.3% lower than its record high of $4,878, which it reached in November 2021, according to statistics from CoinGecko.
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2024-12-30 08:06