Bitcoin (BTC) finally broke through the monumental $100,000 price mark in 2024, entering uncharted territory. With such a significant milestone reached, the focus has turned to the crypto market’s future trajectory. What’s next for BTC and altcoins in 2025?
In a December report titled ‘2025 Crypto Market Outlook’, Fidelity Digital Assets research team highlighted five critical factors to watch ahead of 2025. The report discussed key aspects that would potentially influence the future of digital assets, including the impact of political shifts, macroeconomic policies, and Ether’s (ETH) potential in the maturing bull market.
5 factors to watch ahead of 2025
1. Political changes
Could political changes benefit crypto? The Donald Trump-led United States administration could play a great role in the future of crypto regulations. According to the report, many industry participants are cautiously optimistic about a more favourable stance toward crypto assets, which could lead to long-awaited regulatory clarity and support domestic growth in the U.S. However, Jurrien Timmer, Fidelity’s Director of Global Macro, believes broader fiscal and monetary policies will have a larger impact.
“We’re in a period of fiscal expansion. And both parties seem to not be too afraid to spend money,” says Timmer. “And we’re in a different monetary regime now, where we’ve gone from raising rates and driving real rates higher to now lowering rates.”
This shift in fiscal and monetary policies is expected to create a conducive environment for digital assets. Timmer added, “We’re going to have easier monetary policy and expansionary fiscal policy. And that could be a pretty good one-two punch in favor of digital assets, in my view.”
Read also: Donald Trump’s win, Positive for Ethereum – ConsenSys CEO Joseph Lubin
2. Liquidity, interest rate cuts and inflation
Bitcoin’s recent rally is reminiscent of past bull markets, offering clues about its current phase. According to Chris Kuiper, Research Director at Fidelity Digital Assets, “We were already firmly in a bull market phase before, with bitcoin returning over 150% in 2023 and then adding another 75% year-to-date return earlier in 2024 on the heels of the ETP approvals.”
Kuiper notes that if historical trends hold, the second half of the bull market could bring even higher volatility and price appreciation. However, every cycle is different, and no guarantees can be made.
“The largest macro factors that will drive bitcoin and other digital assets in the year ahead and longer are liquidity and changes in inflation expectations,” says Kuiper. He highlights that liquidity growth and the ongoing interest rate cuts provide strong support for BTC. However, he warns, “Inflation is still elevated above the Federal Reserve’s 2% target, and so I personally think there is still a risk of inflation coming back in a ‘second wave.’ Both of these things would be tailwinds for bitcoin.”
Read also: Bitcoin eyes $2T inflow amid $20T global money supply growth in 2025.
3. Profit-taking strategies
With significant price gains since 2023, many investors are questioning whether it’s time to lock in profits. Fidelity’s research suggests maintaining a long-term perspective and rebalancing portfolios as a way to manage risk effectively.
“If an investor sets a target percentage of their portfolio for bitcoin exposure, they should rebalance accordingly if bitcoin rises or falls,” says Kuiper. He also emphasizes the benefits of this strategy, adding, “Somewhat counterintuitively, Fidelity Digital Assets research shows that historically, rebalancing has actually created a net benefit, as it can take advantage of bitcoin’s high but positive volatility.”
However, investors should remain mindful of potential tax implications when selling assets and consider consulting a tax professional to manage liabilities efficiently, the report added.
4. Ether’s potential resurgence
Ethereum has historically trailed bitcoin in bull markets, and this cycle appears no different. Bitcoin’s lead is often followed by consolidation, during which ETH and other altcoins catch up.
Max Wadington, Fidelity Digital Assets Research Analyst, sees promising signs for ETH’s resurgence. “There has been a bounce back in the spot ether ETP flows during October and November 2024, which finally are showing net positive,” he explains.
However, Wadington warns of challenges, including Ethereum’s growing competition and its perception as complementary to Bitcoin rather than a replacement. “Many investors view Ethereum as a complementary asset to bitcoin rather than a replacement, which might limit its potential to outperform,” says Wadington. Additionally, he notes that if traders continue to treat the two assets similarly, their prices may remain closely correlated despite their different use cases.
Read also: Ether positions for record highs in early 2025 amidst bitcoin halving influence
5. Macroeconomic factors
Macroeconomic conditions remain a significant driver of crypto prices. Kuiper highlights that “liquidity metrics have turned back to positive year-over-year growth, and we have entered another interest rate-cutting cycle.” While these factors are positive for bitcoin, elevated inflation levels remain a concern.
Kuiper points to the possibility of a “second wave” of inflation, which could impact market dynamics. Nonetheless, the combination of increased liquidity and interest rate cuts provides a strong foundation for cryptoassets moving forward.
Final thoughts
Bitcoin’s surge past $100,000 signifies a transformative moment for the crypto market. Given the presence of favourable fiscal and monetary policies, the potential for regulatory clarity, and historical trends suggesting further gains, cryptoassets are poised for continued growth. However, as Fidelity experts suggest, the next phase of this bull market could be as volatile as it is rewarding.
Read also: 5 indicators to watch for Ether’s next move
Image credit: Fidelity Digital Assets
Ndianabasi Tom A Petroleum Engineering degree holder, Ndianabasi’s interest since 2018 has been studying the ever-growing field of blockchain and cryptocurrency, keenly evaluating the innovation, exploration, and expansion of this field locally and globally. The founder of Nitadel a media platform, Ndianabasi has been a Writer at Crypto Asset Buyer (CAB) since 2021. When he is not drilling resources in the blockchain and cryptocurrency field, Ndianabasi is singing, reading, watching crime movies, or playing football.
