Bitcoin and Ether Prices Decline Amid Market Corrections and Fed Sentiment
There was no shortage of crypto price predictions this year, particularly in November and December following the election. Some analysts projected a BTC target of $125,000 by the end of 2024, while others warned of potential pullbacks.
Current market status as of 2:10 pm ET Monday: BTC at ~$94,300 and ETH at ~$3,400.
Bitcoin has declined approximately 12% since exceeding $108,000 on Dec. 17. Ether, previously trading above $4,000, has dropped 15% during the same period.
Matt Mena, research strategist at 21Shares, linked the downturn to more hawkish signals from the Federal Reserve ahead of 2025. The forecast of two rate cuts next year instead of three "dampened market sentiment," impacting prices for BTC, ETH, and other risk assets.
Mena noted that the six-month high in the 10-year Treasury yield reduces the attractiveness of crypto assets as investors favor safer returns. Additionally, some investors are securing gains from the year, while others are using tax-loss harvesting strategies to offset capital gains and reduce taxable income.
Mena characterized this correction as “healthy,” typical after significant price increases. He believes if BTC maintains above $85,000, it could sustain recent upward momentum; otherwise, accelerated selling may occur. The next psychological resistance level for BTC is $110,000; breaking this could lead to a surge toward $120,000 and potentially $150,000 by summer.
Sergei Gorev, head of risk at YouHodler, predicts continued corrective sentiment into 2025, citing the historical correlation between BTC and the declining M2 money supply. Conversely, Galaxy’s Alex Thorn anticipates BTC reaching 20% of gold's market capitalization by 2025, up from slightly over 10% currently.
Thorn expects BTC to surpass $150,000 in the first half of the year, with a potential peak of $185,000 in Q4. He asserts that institutional, corporate, and nation-state adoption will drive BTC to new heights in 2025, noting its historical appreciation outpacing all other asset classes, including the S&P 500 and gold, which he believes will continue in 2025.