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Ethereum’s Q1 Potential: $50 Billion ETF Inflows and Macro Risks in 2025

Arslan Butt•Monday, December 30, 2024•2 min read

Ethereum (ETH) has a strong history of Q1 performance, often outperforming Bitcoin in the wake of key macroeconomic and market events.

Coinglass data highlights Ethereum’s impressive rallies in Q1 2017 and Q1 2021, where it surged 518% and 161%, respectively, far exceeding Bitcoin’s gains of 11.9% and 103.2% during the same periods.

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For 2025, optimism around Ethereum’s Q1 performance is fueled by several factors, including the broader implications of the Bitcoin halving cycle and new U.S. leadership under the Trump administration. Analysts suggest that favorable regulatory developments could provide tailwinds for the digital asset market, positioning Ethereum as a potential leader in the next crypto rally.

However, the outlook isn’t without challenges. The Federal Reserve’s decision to trim the number of projected rate cuts in 2025, coupled with a hawkish macro environment, could temper the market’s momentum.

 

ETH/USD

Rising Ethereum ETF Inflows Signal Optimism

1. Record ETF Inflows in 2024

Spot Ether exchange-traded funds (ETFs) have seen consistent inflows, with a net increase of over $2.5 billion across 22 of the last 24 trading days in 2024, according to Farside Investors. Crypto hedge fund ZX Squared Capital projects that these inflows could surpass $50 billion in 2025, driven by anticipated regulatory reforms under the new administration.

CK Zheng, Chief Investment Officer at ZX Squared Capital, expects crypto-friendly rules to further enhance the appeal of digital assets. “We foresee a significant boost in 2025 as supportive regulations accelerate growth in the asset class,” he said.

2. Impact on Market Sentiment

ETF inflows are seen as a vote of confidence in Ethereum’s long-term potential. This influx of institutional capital could help stabilize market volatility, providing a foundation for sustained growth in the coming months.

Hawkish Macro Policies Pose Risks

While the ETF narrative is encouraging, not all analysts share the same optimism. Markus Thielen, founder of 10x Research, predicts Ethereum could face headwinds in 2025. The Federal Reserve’s updated projections place the federal funds rate at 3.9%, higher than the previously expected 3.4%.

Thielen points to diminished liquidity tailwinds as a key risk factor, stating, “Unlike previous years, 2025’s hawkish policies may limit Ethereum’s ability to set new all-time highs.”

Despite this, Thielen remains cautiously optimistic about Bitcoin’s outlook, suggesting a best-case scenario price of $160,000, though it could stabilize around $125,000.

Ethereum’s Current Performance and Future Outlook

Ethereum is currently trading at $3,997, a modest 0.6% increase over the past 24 hours but still 30.3% below its all-time high of $4,878, set in November 2021. Bitcoin, meanwhile, is trading at $93,492.

As 2025 approaches, Ethereum’s trajectory will depend heavily on the interplay between macroeconomic factors, regulatory developments, and institutional participation. While Q1 has historically been a strong quarter, analysts remain divided on whether history will repeat itself.

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ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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