Key Takeaways:
- Long-term Ethereum holders surged in 2024, while Bitcoin holders declined.
- Ether’s strong past Q1 performance raises hopes for a 2025 rally.
- The market’s future largely hinges on macroeconomic factors and potential regulatory shifts.
Throughout 2024, the number of long-term holders of Ethereum (ETH) steadily increased, starkly contrasting to the decline seen in Bitcoin (BTC) holders. This shift indicates a growing confidence in ETH as it enters the new year.
According to IntoTheBlock, data shows that while the percentage of long-term Bitcoin holders fell, Ether’s share of long-term holders rose, surpassing Bitcoin early in 2024. This change suggests that investors increasingly look to Ether for potential long-term gains.
Ethereum Historical Performance and Potential for 2025
Historically, Ethereum has shown strong performance in the first quarter of new years, especially following a United States election or Bitcoin halving cycle. Notably, Q1 2017 and Q1 2021 saw Ether rally by 518% and 161%, respectively.
These performances outpaced Bitcoin, which saw much smaller gains of 11.9% and 103.2% in those same periods. Given this historical trend, there is significant optimism for Ether leading a potential market rally in Q1 2025. However, some industry experts remain cautious, warning that a “hawkish” macroeconomic climate could temper market enthusiasm and slow down Ether’s momentum.
The Role of ETFs and Regulation
The recent success of spot Ether ETFs is also bolstering Ether’s outlook for 2025. There have been inflows into such ETFs for 22 of the last 24 trading days, taking total inflows to over $2.5 billion. Some analysts expect net inflows into Ether ETFs to top $50 billion in 2025. Others think these inflows would keep on increasing, particularly if crypto-friendly regulations were introduced by the new administration in the U.S.
CK Zheng, CIO at ZX Squared Capital, said the above changes can be added to the impressive run of digital assets. Not everybody is that optimistic, though. Markus Thielen from 10x Research thinks that given that the monetary policy is still hawkish and liquidity continues to dry up, the market may be in for some challenges. He also expects Ether to underperform and not to make any new all-time highs in such a scenario.
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