Thought of the week

2024 will go down as a historic year for the digital asset market. The probability of temporary setbacks will therefore increase immensely for the first quarter of 2025, although the trend should remain intact. These setbacks and correction phases help the market to establish high support zones in the long term and attract new volume.

Digital Asset News

The Bitcoin price could reach a value of USD 160,000 in 2025, driven primarily by improved macroeconomic conditions and an easing of global monetary policy.

The European Central Bank (ECB) also lowered its key interest rate by 25 basis points to 3% on December 12 in order to stimulate the European economy, although this should also benefit Bitcoin. The Chinese central bank also decided to cut its key one-year government bond rate by 40 basis points to 5.6% on November 21, the first time in more than two years, after the country’s economy cooled recently. “This double easing could drive capital inflows into risky financial products, including crypto. Combined with the traditional optimism that markets feel in December, we could be in for a ‘Christmas rally’ that pushes Bitcoin and other cryptocurrencies higher.”

A rate cut by the US Federal Reserve would allow Bitcoin to end the year “at record levels”. Kooner says: “Lower interest rates generally reduce the cost of borrowing, which in turn increases the risk appetite of investors. Cryptocurrencies, which are a high-risk financial product, usually benefit in times of such increased liquidity. However, the bitcoin price is currently too high for a long-term forecast, so caution should always be exercised

VanEck expects the bull market for cryptocurrencies to reach a “medium-term peak” in the first quarter of 2025 before rising to an all-time high by the end of the year, the asset manager said in a blog post on December 13. “We expect Bitcoin (BTC) to be valued at around $180,000 at the peak of the cycle and Ethereum (ETH) to trade above $6,000,” VanEck said in a blog post by Matthew Sigel, head of digital asset research. However, before these record highs are reached, VanEck expects “a 30% downturn for BTC and even up to 60% for altcoins as the market enters a consolidation phase next summer”. However, persistently high funding rates above 10% for BTC perpetual futures indicate that the crypto market has reached a temporary local high, according to VanEck. Other analysts have a similar view on the course of events. According to Ryan Lee, chief analyst at Bitget Research, the BTC price could soon fall by 30% before resuming its upward trend.

“Historical data trends show that Bitcoin can still correct by up to 30% before it reaches its cyclical top,” said the analyst. This is partly due to the fact that markets in the United States generally correct after the inauguration of a president. President-elect Donald Trump will take office on January 20, 2025. According to some crypto analysts, the Ethereum price could surpass its previous all-time high in the first quarter of 2025, but Ethereum has so far been unable to hold above the psychologically important USD 4,000 mark, despite Bitcoin breaking through the record USD 100,000 mark for the first time in the history of cryptocurrencies on December 6.

Nonetheless, Ether could soon begin to catch up with Bitcoin’s gains after the crypto market reduced its leverage last week, “indicating a reset of leveraged long positions,” according to a market report published by Bybit and Block Scholes. The reduced leverage could set Ether up for a rally to a new all-time high in the first quarter of next year. Analysts at Bybit accordingly predicted to Cointelegraph that they expect “a new all-time high in Q1 2025”. They added: “ETH is currently showing strength in the derivatives markets, with the catch-up race still in full swing.”

Digital Asset Market

Market review and outlook

The majority of digital assets experienced upswings last week, with Bitcoin establishing a new all-time high of ~$106,000 at the start of the week. Altcoins also benefited from these renewed Bitcoin advances and were able to show positive price developments in lockstep. The period before Christmas is usually a positive one for the global financial markets, which is expected to be a solid week, especially as interest rate cuts are expected in the US. Analysts expect the first setbacks to follow in the course of the first quarter of 2025, so the momentum in the market remains positive and could lead to further upswings. Based on news, the market saw a relaxed trading week.

Chart technique

From a chart perspective, Bitcoin is now at an all-time high again, confirming the positivity and strength to flip the $100,000 mark into a potential support zone. Should the global financial markets experience a positive pre-Christmas week, digital assets would in all likelihood continue to climb, allowing Bitcoin to reach new highs. Altcoins such as Solana and Polkadot in particular therefore offer a good risk/reward ratio for the coming week. If the markets are unable to confirm the price levels, altcoins in particular are likely to experience major setbacks.

The next price targets in the event of a positive development: ~$110,000, ~$115,000 ~$117,500

The next price targets in the event of negative performance: ~$100,000, ~$97,500 ~$94,000

Trading idea

Since last week’s minor correction, some altcoins have not yet been able to regain the strong momentum that Bitcoin did. This means that altcoins that are trading well below their local highs could represent a lucrative alternative.