If history repeats itself, Ether could be one of the leaders in a potential Q1 rally in 2025. However, an industry analyst warns that a "hawkish" macro climate could slow market momentum.
Historical Performance
The first quarters of a new year following a United States election and Bitcoin halving cycle have produced some of Ether’s best-performing quarters. Notably, Q1 2017 and Q1 2021 saw Ether rally by 518% and 161%, respectively, according to CoinGlass data. Those returns even outpaced Bitcoin’s 11.9% and 103.2% for those quarters.
Historical Quarter-on-Quarter Return
Ethereum quarter-on-quarter return since 2016. Source: CoinGlass
Tailwinds in 2025
One of the tailwinds could come from spot Ether exchange-traded funds, which have seen inflows in 22 of the last 24 trading days for a net inflow of over $2.5 billion, according to Farside Investors. This has led one hopeful ETH maxi to predict that Ether ETFs will see over $50 billion of net inflows in 2025.
Crypto hedge fund ZX Squared Capital’s chief investment officer also expects inflows to "dramatically" increase in 2025: "We expect the inflows will dramatically increase in 2025 when the new Trump administration issues more crypto-friendly rules and regulations to further boost the digital asset class in general," CK Zheng told Cointelegraph.
Bearish Scenario
However, 10x Research founder Markus Thielen has painted a more bearish scenario. He expects Ether to continue to underperform and fail to set a new all-time high under a hawkish macro climate in 2025: "We are projecting a more conservative outlook for 2025. The initial hawkish policy could be tested by diminishing liquidity tailwinds, unlike in previous years," Thielen told Cointelegraph.
Impact of Hawkish Policy
The crypto market cap has pulled back 12.1% to $3.41 trillion since the US Federal Reserve’s Federal Open Market Committee trimmed the number of 2025 projected interest rate cuts from five to two in a Dec. 18 meeting. The federal funds rate could now stop near 3.9% in 2025 as opposed to the expected 3.4%, leading to a less favorable macro environment for risk-on assets like Bitcoin and Ether.
Bitcoin’s Potential
However, Thielen still says that Bitcoin could reach $160,000 in a "best-case scenario," though it will likely fall to and stabilize around the $125,000 mark. Bitcoin is currently trading at $93,492, while Ether is priced at $3,997 — up 0.6% over the last 24 hours but still down 30.3% from its all-time high set back in November 2021, according to CoinGecko data.
Conclusion
If history repeats itself, Ether could be one of the leaders in a potential Q1 rally in 2025. However, an industry analyst warns that a "hawkish" macro climate could slow market momentum. The impact of the hawkish policy and the potential for Bitcoin to reach $160,000 will likely play a significant role in determining the direction of the crypto market in 2025.
