The favorable policies of the Trump administration, the inflow of funds into exchange-traded funds (ETFs), and the progress of stablecoin technology have the potential to drive Bitcoin to new all-time highs (ATHs).
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The pro-cryptocurrency approach of officials appointed by Trump to the U.S. Securities and Exchange Commission (SEC) is creating a more favorable environment for digital assets. This year, Bitcoin hit a new all-time high, buoyed by the approval of a U.S. spot ETF and Trump's election victory, although some assets have outperformed Bitcoin.
Both Bitcoin and Ethereum are expected to see significant developments by 2025, driven by factors such as the anticipated approval of U.S. cryptocurrency ETFs and the possible establishment of a Bitcoin strategic reserve.
The U.S. SEC's green light for a Bitcoin spot ETF has further increased investor interest and capital inflows into Bitcoin. According to CoinDesk's Bitcoin Price Index, this approval has already shown a significant impact, with Bitcoin's price more than doubling since last year. These capital flows have been the most important driver of cryptocurrency returns, and this trend is expected to continue through 2025.
Expectations of crypto-friendly policies under a Trump re-election have also injected optimism into the cryptocurrency market. However, it has also been pointed out that the Federal Reserve's interest rate policy could affect investor sentiment and potentially shift investors' focus away from risk assets like Bitcoin.
The continued issuance of Stablecoins will help create a healthier cryptocurrency market, and the enthusiasm for the industry has been reignited since Trump's election, with the issuance of Stablecoins also receiving a boost. The purpose of Stablecoins is to maintain a stable price over time, which means that as long as the Stablecoin issuer has sufficient collateral to actually support them, their volatility will be lower than that of cryptocurrencies like Bitcoin.
Regulation will be a major theme next year. The incoming U.S. president has appointed several pro-cryptocurrency candidates to the cabinet. While the industry generally expects regulation to be more relaxed, the actual policies remain unclear. The result may be a shift from enforcement-based regulation to a more legislative approach, "rather than deregulation, it's more about eliminating adverse factors."
Overall Market Outlook
The approval of a U.S. spot ETF has significantly increased investor interest and capital inflows into Bitcoin, driving its price to soar.
Cryptocurrencies have a place in a diversified asset portfolio, and portfolio allocation will be key to future returns.
Trump's appointed officials, including the nomination of Paul Atkins as the new SEC chairman, are expected to lead to a relaxation of regulation, which could drive more widespread adoption of cryptocurrencies.
Innovations in Stablecoins are also expected to play a critical role in the growth of the cryptocurrency market, providing investors with a more stable alternative.
The current macroeconomic environment, characterized by central bank rate cuts and other policies supporting economic growth, is expected to continue to support risk trading until the first quarter of 2025.
The U.S. government may establish a Bitcoin strategic reserve, further boosting Bitcoin's price and enhancing its mainstream acceptance.
The growth of Ethereum is also expected to be driven by the expansion of its ecosystem and Bitcoin's new all-time high, and these factors combined could push Ethereum's price, with favorable conditions potentially reaching $6,000.
Once ETH breaks through the psychological barrier of $3,500, it may gain further upward momentum, challenging the $4,000 level within the year. For long-term investors, Ethereum's price trajectory, supported by the market fundamentals, could bring significant returns as it approaches $5,000 in the first quarter of 2025.
Bitcoin reached a high of $99,865 on the 26th, up 8% from the low point on the 23rd. This sharp rise came after a 14.5% decline from the all-time high of $108,275 set on December 17. Market sentiment is cautiously optimistic, with traders expecting Bitcoin to move higher above $105,000. Bitcoin derivatives data is neutral to bullish, indicating that the violent price fluctuations have not significantly impacted market sentiment.
The current market dynamics suggest a cautiously hopeful outlook for both Bitcoin and Ethereum. While the cryptocurrency market still faces challenges and uncertainties, the overall sentiment remains positive. Positioning at the end of the month, collecting in January.
Since Altcoins don't follow Bitcoin's downtrend, it means Altcoins have already reached a relative bottom, and Bitcoin cannot keep falling forever, it will also rebound, and when Bitcoin rebounds, Altcoins will rebound even more.
