History may repeat itself as Ether (ETH) could potentially lead a rally in the first quarter of 2025. Industry analyst Markus Thielen warns that a "hawkish" macro climate could slow market momentum, but ETH’s past performance provides reason to be optimistic.
Historical Performance and Tailwinds
The first quarters following a United States election and Bitcoin halving cycle have been significant for Ether. In Q1 2017 and Q1 2021, ETH rallied by 518% and 161%, respectively, outperforming Bitcoin’s returns of 11.9% and 103.2% in those quarters (CoinGlass data).
One of the driving factors behind this optimism is the increasing popularity of spot Ether exchange-traded funds (ETFs). These ETFs have seen inflows for 22 out of the last 24 trading days, with a net inflow exceeding $2.5 billion (Farside Investors). This trend has led one optimistic ETH maxi to predict that ETFs will see over $50 billion in net inflows in 2025.
Crypto Hedge Fund Expectations
Crypto hedge fund ZX Squared Capital’s Chief Investment Officer, CK Zheng, expects a significant increase in inflows for Ether ETFs. According to Zheng:
"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."
Bearish Scenario
However, not everyone shares this optimism. Markus Thielen from 10x Research has painted a bearish picture for Ether’s performance 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 expects Ether to continue underperforming and fail to set a new all-time high under a hawkish macro climate.
Market Cap and Federal Reserve Impact
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 projected interest rate cuts from five to two in a December 18 meeting. The federal funds rate is now expected to stop near 3.9% in 2025, as opposed to the previously expected 3.4%. This change could lead to a less favorable macro environment for risk-on assets like Bitcoin and Ether.
Potential Price Action
Despite Thielen’s bearish outlook, he still predicts that Bitcoin could reach $160,000 in a "best-case scenario" but 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 in November 2021 (CoinGecko data).
Conclusion
Ether’s historical performance and potential tailwinds provide a strong case for it to lead a rally in Q1 2025. However, industry analyst Markus Thielen warns that a hawkish macro climate could slow market momentum. The upcoming year will be crucial for Ether’s price action, and investors should closely monitor market developments.
Related Links
- Solana overthrows Ethereum’s 8-year reign as top ecosystem for new devs
- Comeback 2025: Is Ethereum poised to catch up with Bitcoin and Solana?
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