As 2025 approaches, Ethereum $ETH could strengthen, according to historical data, with the US political environment and capital inflows into ETFs as further catalysts for growth. What do analysts think?
Historical data suggests a potentially promising start to the year, especially after events such as the US election and the Bitcoin halving cycle.
In Q1 2017 and 2021, Ethereum rose 518% and 161% respectively, outperforming Bitcoin's $BTC gains of 11.9% and 103.2%.
A significant factor supporting this bullish narrative is the positive trend of capital inflows into Ethereum-linked spot exchange traded funds (ETFs).
In the last 24 trading days of 2024 alone, 22 days saw inflows exceeding outflows, resulting in more than $2.5 billion raised from investors.
Some predictions reckon that an additional $50 billion could be raised from investors through ETFs in 2025, which could be aided by the expected cryptocurrency-friendly policies from the new Trump administration.
CK Zheng, chief investment officer at ZX Squared Capital, has an optimistic outlook for 2025.
I expect a dramatic increase in money inflows due to potential regulatory changes that could boost the cryptocurrency sector, Zheng said.
Zheng's outlook aligns with many other market players who believe that supportive legislative moves could boost the cryptocurrency industry significantly.
There are also less optimistic scenarios among analysts
However, not all analysts share this bullish view; for example, Markus Thielen of 10x Research is more conservative about Ethereum's future in 2025.
In particular, he highlights the macroeconomic environment, which could be a potential obstacle to the second largest cryptocurrency by market capitalization surpassing the 2021 highs.
Interest rates are now expected to stabilize near the 3.9% band instead of the previously projected 3.4% for 2025, creating a less favorable environment for risk assets such as Bitcoin and Ethereum.
Despite these challenges, optimism persists in the cryptocurrency market.
Thielen suggests that Bitcoin could reach $160,000 at best, although a more likely scenario is that it will oscillate around $125,000.
Currently, Bitcoin is trading around $94,000, while the price of Ethereum is oscillating at $3,400.
Ethereum thus continues to remain 30.3% below its all-time price high of $4,878, which was reached in November 2021.
