As the cryptocurrency market approaches the first quarter of 2025, many are wondering whether Ether (ETH) could lead a market rally, as it has done in the past.
With the U.S. election and Bitcoin halving cycles behind, history suggests Ether could once again shine in the opening months of the year. However, not everyone is convinced that the market conditions will be favorable for such a surge.
History Could Repeat Itself for Ether
Looking back, the first quarter following a U.S. election and Bitcoin halving cycle has been a fruitful period for Ether. In Q1 2017, ETH saw a massive rally of 518%, and it followed up with a 161% increase in Q1 2021. These impressive gains outpaced Bitcoin’s returns during the same periods, which stood at 11.9% and 103.2%, respectively, according to CoinGlass data. With these historic performances in mind, some analysts are optimistic that Ether could once again lead the way in Q1 2025.
A key factor driving this optimism is the rise of spot Ether ETFs, which have seen substantial inflows recently. In fact, data from Farside Investors reveals that Ether ETFs have experienced inflows in 22 out of the past 24 trading days, resulting in a net influx of over $2.5 billion. This growing interest in Ether ETFs has sparked predictions that total inflows could exceed $50 billion in 2025.
A Hawkish Macro Environment Could Slow Momentum
Despite the upbeat outlook from some industry observers, others warn that the broader macroeconomic environment could dampen the potential for a robust Q1 rally. Markus Thielen, the founder of 10x Research, has expressed caution, predicting that Ether may struggle to outperform in 2025. Thielen suggests that a “hawkish” macro climate could slow market momentum, especially as liquidity tailwinds from previous years begin to fade.
The U.S. Federal Reserve’s recent shift in its interest rate policy adds weight to Thielen’s argument. Following the Federal Open Market Committee’s December meeting, projections for interest rate cuts in 2025 were slashed from five to just two, leading to expectations of a less favorable environment for riskier assets like Ether.
While Thielen still sees a potential for Bitcoin to rise to $160,000 under ideal conditions, he predicts that Ether may fail to reach its all-time high, currently sitting at $3,997, well below its peak of $4,878 in November 2021.
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