The bull market, which began in January 2023, is likely to reach its cyclical peak in the first quarter of 2025 or the second quarter at the latest. Currently, most cryptocurrencies are in a downward movement. Bitcoin BTC fell 7% to $94,827 after trading above $100,000 earlier this week, according to Messari’s website. Etherum fell even more, down 8.5% in the last 24 hours to $3,307. Several other major cryptocurrencies, e.g., Dogecoin and Avalanche, are down more than 10% in the last 24 hours. Let’s check how experts explain where this correction comes from and when we can expect further increases.
Ups and downs — which way will the BTC and ETH chart tilt?
Bitcoin and Ethereum surged earlier in the week, according to analysts, as a result of growing market optimism amid Donald Trump’s imminent presidential inauguration. This was evident in the increase in futures financing rates.
However, Min Jung, an analyst at Presto Research, believes broader markets, including equities, are weakening due to macroeconomic concerns about sustained inflation.
“Not just crypto, but both the NASDAQ and the S&P 500 fell more than 1% yesterday, fueled by inflation fears after ISM data revealed faster-than-expected growth in the U.S. economy,” Jung said.
Rachael Lucas, a crypto analyst at BTC Markets, noted that recent data from the U.S. economy has led traders to predict that the Federal Reserve will keep interest rates elevated for an extended period of time.
“The market was already tight after Federal Reserve Chair Jerome Powell’s comments in December, which indicated a strong monetary policy stance and reduced expectations for further interest rate cuts, resulting in increased volatility,” Lucas explained.
In turn, Crypto Dan, a contributor to CryptoQuant, said in a Jan. 6 post:
“With a significant influx of new investment, as well as additional funding from existing investors, the market can be expected to be in the final stages of this cycle right now.”
In the fourth quarter of 2024, the percentage of BTC Bitcoin traded for less than a month rose to 36%, reminiscent of previous crypto market highs. CryptoQuant believes that the indicator is likely to continue increasing, potentially increasing by two to four times before correcting at the start of a bearish cycle.
US interest rates and cryptocurrencies
In his December comments, Powell emphasized that the fight against inflation is still ongoing. This statement came along with President Trump’s commitment to impose significant tariffs, which could further fuel inflation.
According to CME Group’s FedWatch tool, there is now a 95.2% chance that the Federal Reserve will keep U.S. interest rates steady between 4.25% and 4.5% during its next decision on January 29.
Looking ahead, Trump’s Jan. 20 inauguration is expected to impact volatility in the crypto market as investors prepare for regulatory shifts, Lucas noted.
“With a pro-crypto majority in Congress and appointments like Scott Bessent as Treasury Secretary and Elon Musk as Advisor, the administration is showing a significant shift toward crypto,” Lucas noted.
Investors are also eagerly awaiting this month’s key economic events, including the release of the FOMC minutes and non-farm payrolls data this week, as well as the Consumer Price Index (CPI) data scheduled for January 15. These events will help them assess monetary policy and inflation risks.
Predictions for 2025: Record levels of Bitcoin and Ethereum and a strategic BTC reserve in the US?
The cautious approach of some analysts contrasts with the general market sentiment and the assessment of experts, who expect the bull market to continue until the end of 2025. Analysts at Steno Research expect 2025 to be the best year in crypto history, with BTC and ETH reaching all-time highs.
Asset manager VanEck expects the crypto bull market to reach a “medium-term peak” in the first quarter of 2025 and then rise to record highs by the end of the year. in a December blog post, VanEck said:
“At the peak of the cycle, we predict Bitcoin (BTC) will be valued at around $180,000 and Ethereum will trade above $6000.” The current situation in the cryptocurrency market indicates significant volatility, resulting from macroeconomic factors such as inflation and the Federal Reserve’s policy.
