While long-term Ethereum holders increased, Bitcoin saw a decline to 62%. Ethereum's growth was boosted by spot Ether ETFs, which doubled inflows to $2.1 billion by December, and regulatory developments. Despite a BTC price correction from $106,000 to $93,000 in December, analysts still predict a potential rally to $200,000. The altcoin market is also close to a breakout phase, with TOTAL3 approaching its 2021 peak of $1.13 trillion. Meanwhile, the Crypto Fear & Greed Index fell to 65, signaling cooling sentiment.
Ethereum Leads Long-Term Holding Trends
The cryptocurrency market experienced a shift in investor sentiment throughout 2024 as Ethereum (ETH) gained traction among long-term holders while Bitcoin (BTC) saw a decline. Data that was shared by IntoTheBlock revealed that the percentage of Ether holders keeping their tokens for more than a year rose from 59% in January to 75% by the end of the year. In contrast, Bitcoin long-term holders fell from 70% to 62% over the same period. As of Dec. 30, long-term Bitcoin holders accounted for 62.3% of total BTC ownership, while Ethereum long-term holders reached 75.1%.
The increase in long-term Ethereum holders proves that there is growing confidence in the asset as it heads into 2025. This sentiment is also boosted by other developments in the Ethereum ecosystem, including a surge in spot Ether ETF inflows. These inflows doubled from $1 billion in November to $2.1 billion by the end of December.
Additionally, the incorporation of staking features into Ether ETFs and regulatory shifts, like the potential reforms in the SEC and increased oversight by the CFTC, are seen as contributing factors to Ethereum's strengthening position.
Bitcoin, on the other hand, faced a challenging period in December. Technical analyst Gert Van Lagen noticed a “blow-off” in BTC’s price after the asset dropped from an all-time high of $106,000 to $93,000 between Dec. 16 and 30. The decline was attributed to long-term holders cashing out due to market euphoria. Despite this short-term correction, Van Lagen still forecasted that Bitcoin could surpass $200,000 in the near future.
Overall, the Ethereum network’s continued innovation and rising institutional interest positioned it as a key player heading into 2025, while Bitcoin is still a dominant force with major price potential despite its recent fluctuations. Experts also believe that a Trump administration could improve Ethereum’s prospects even more.
Ether Eyes Q1 Rally
Ether could be one of the front runners in a potential Q1 rally in 2025, according to historical patterns, but some analysts still warned that macroeconomic challenges could temper market momentum. Historically, the first quarters after a United States election and a Bitcoin halving have been favorable for Ether. In fact, Q1 of 2017 and Q1 of 2021 delivered impressive returns of 518% and 161%. These performances outpaced Bitcoin, which saw returns of 11.9% and 103.2% during the same periods.
Spot Ether ETFs are also expected to play a role in fueling a potential rally. Some optimistic projections suggest that Ether ETFs could see more than $50 billion in net inflows in 2025. CK Zheng, CIO of ZX Squared Capital, agrees with these predictions, and believes that regulatory changes under the Trump administration could drive large increases in ETF inflows and further strengthen the digital asset class.
Despite the optimism, not all industry experts are bullish on Ether's prospects. Markus Thielen, founder of 10x Research, predicts that Ether may underperform in 2025 because of a hawkish macroeconomic climate. He specifically pointed to the Federal Reserve's Dec. 18 decision to reduce the number of projected 2025 interest rate cuts from five to two, pushing the federal funds rate forecast to 3.9% instead of the previously expected 3.4%.
This tighter monetary policy could create a much less favorable environment for risk-on assets like Bitcoin and Ethereum. Thielen suggested that Ether might struggle to achieve a new all-time high in these conditions, though he pointed out that Bitcoin could still reach $160,000 in a best-case scenario or stabilize around $125,000.
The broader cryptocurrency market reflected these macroeconomic concerns as the total market capitalization pulled back 12+% to $3.29 trillion. ETH is currently trading hands at $3,418 after its price saw a slight 0.76% increase over the past 24 hours. Bitcoin, meanwhile, is trading at $93.731.83 after its price dropped by 1.29%.
ETH’s price action over the past month (Source: CoinMarketCap)
Altcoin Market Nears Key Breakout Threshold
According to pseudonymous trader Daan Crypto Trades, the altcoin market is approaching a critical juncture, and the total market cap of altcoins needs to rise approximately 16% to trigger the euphoric phase of an altcoin season. In a Dec. 28 post on X, Daan stated that the “euphoria” or “mania” phase will likely begin once TOTAL3, the total market cap of all cryptocurrencies excluding Bitcoin and Ether, surpasses its 2021 all-time high of $1.13 trillion and enters price discovery.
Daan stated that as long as TOTAL3 stays in the $840 billion to $1.1 trillion range, market conditions are likely to remain choppy. He also advised traders to stay cautious if the metric falls below $800 billion.
The trader's caution comes amidst a broader sentiment of heightened volatility in the crypto market. Syncracy Capital co-founder Daniel Cheung attributed this to a shift in trader behavior. Cheung also suggested that an increasing number of traders are adopting short-term strategies and are closely monitoring hourly charts and leveraging their positions, which has slowed the pace of breakouts compared to previous cycles.
Despite the volatile environment, there are still signs of rotation toward altcoins. According to CoinMarketCap, some of the top-performing cryptocurrencies over the past week include Bitget Token, Virtuals Protocol, and Pudgy Penguins. With Bitcoin dominance nearing 60% and its price stalling in the final days of 2024, traders are increasingly turning their attention to altcoins.
Pseudonymous trader Dyme also currently prefers altcoins due to their superior risk-reward profile at this stage in the market cycle. Dyme suggested that the time to accumulate Bitcoin has passed for the next 1.5 years, and believes the better opportunities lie with altcoins.
Crypto Fear & Greed Index Falls
The Crypto Fear & Greed Index declined to its lowest level since mid-October due to the recent Bitcoin price slump. As of Dec. 30, the index stands at 65. This means that the index is still in greed territory but reflects a cooling market mood compared to the highs that were seen in November.
Crypto fear and greed index (Source: Alternative)
Throughout November and December, the Crypto Fear & Greed Index maintained scores above 70, driven by optimism after President-elect Donald Trump’s victory and the election of several pro-crypto lawmakers. The index peaked at 94 on Nov. 22, signaling extreme greed. The index’s calculation incorporates multiple factors, including market momentum, dominance, social media activity, Google Trends, volatility, and surveys.
Despite recent market fluctuations, Bitcoin is still the top-performing asset of the past decade, according to Prem Reginald, a CoinGecko blockchain researcher. In 2024 alone, Bitcoin delivered returns of 129%, greatly outpacing traditional assets like gold, which posted 32.2% year-to-date gains, and the S&P 500, which returned 28.3%.
