As the year draws to a close, the crypto market continues to be a hotbed of speculation and analysis, with predictions for the future of Bitcoin and Ethereum fluctuating as dramatically as the cryptocurrencies themselves. In November and December, after the US election, there seemed to be an influx of price forecasts, with some analysts setting sights on a $125,000 level for Bitcoin at the end of 2024. However, others cautioned about potential pullbacks.
As of 2:10 pm ET Monday, Bitcoin was trading at approximately $94,300 and Ethereum at around $3,400. This represents a significant drop in value for both digital currencies, with Bitcoin falling roughly 12% since peaking above $108,000 on Dec. 17. On the same day, Ethereum was trading higher than the $4,000 mark but has since seen a 15% decline.
Matt Mena, a research strategist at 21Shares, attributes this downward trend to the Federal Reserve’s hawkish stance heading into 2025. The forecast of two rate cuts next year rather than three has, according to Mena, dampened market sentiment and contributed to the downturn in prices for Bitcoin, Ethereum, and other risk assets.
Moreover, Mena points out the six-month high in the 10-year Treasury yield, which makes crypto assets less appealing as investors turn towards safer and more predictable returns. Meanwhile, some investors are locking in gains achieved over the year, while others employ tax-loss harvesting strategies, selling assets that have declined in value to offset capital gains and lower taxable income.
Despite this, Mena and other analysts view this as a “healthy” correction, typical for Bitcoin after a significant price rally. If Bitcoin can maintain a level above $85,000, Mena believes it will uphold the upward trend seen in the recent months. Yet if it fails to do so, we could witness accelerated selling and further price declines.
“The next major psychological price level to watch is $110,000,” Mena noted, “Once Bitcoin breaks through this resistance, we could see a swift surge to $120,000, with the potential to target $150,000 by the summer as momentum builds.”
YouHodler’s head of risk, Sergei Gorev, anticipates the corrective sentiment in the crypto market to linger into 2025, linking this to the historical correlation between Bitcoin and the declining M2 money supply.
Meanwhile, Alex Thorn from Galaxy, expects Bitcoin to reach 20% of gold’s market capitalization in 2025, from its current level of just over 10%. Thorn predicts Bitcoin will cross $150,000 in the first half of the year, with a potential peak of $185,000 in Q4.
Thorn wrote,”A combination of institutional, corporate and nation-state adoption will propel Bitcoin to new heights in 2025. Throughout its existence, Bitcoin has appreciated faster than all other asset classes, particularly the S&P 500 and gold, and that trend will continue in 2025.”
