Bitcoin may see significant price gains in the first quarter of 2025, thanks to over $612 billion in anticipated liquidity entering the market. This influx could offset concerns about delayed cryptocurrency regulations in the United States.
In the last 24 hours leading up to 8:00 a.m. UTC on January 8, Bitcoin dropped nearly 6%, falling below the critical $100,000 threshold. The level has been a psychological barrier since December 19, according to data.
While optimism surrounds President-elect Donald Trump’s upcoming inauguration on January 20, ongoing delays in crypto regulatory clarity could weigh on investor sentiment and market performance.
However, Arthur Hayes, co-founder of BitMEX, suggests that the U.S. Treasury’s plan to inject $612 billion in liquidity by March 2025 could drive Bitcoin higher despite regulatory uncertainty. In a January 7 blog post, Hayes noted:
“A disappointing lack of pro-crypto policy from the Trump administration may be mitigated by an extremely favorable liquidity environment, with a projected $612 billion increase in Q1 2025.”
Bitcoin’s Potential Rally and Market Correction
Hayes predicts that the increased liquidity could lead to a Bitcoin rally, with a possible local peak in March. However, this rally might be followed by a sharp correction as markets adjust to a lack of significant crypto policy changes under the Trump administration.
He cautioned in a December 18 post:
“The realization that Trump has limited time to enact meaningful policy changes will likely result in a significant market sell-off for crypto and other assets linked to the Trump 2.0 narrative.”
Despite these warnings, analysts maintain a bullish long-term outlook for Bitcoin. Some expect the cryptocurrency to reach new highs above $150,000 later in 2025. This optimism stems from projections of a $20 trillion expansion in the global money supply, which could bring $2 trillion in capital into Bitcoin.
Will Bitcoin Reclaim $100,000 Before the Inauguration?
Bitcoin’s recent dip has been attributed to reduced trading activity by institutional investors during the holiday season. However, institutional capital tends to reenter the market at the start of the new year, potentially driving Bitcoin back above $100,000 before the inauguration.
Binance Research commented:
“Bitcoin could reclaim $100K ahead of the inauguration if expectations for favorable crypto regulations persist, though sustained levels will require continued market support.”
The research team emphasized that maintaining these levels will depend on factors such as regulatory progress and Federal Reserve policies throughout 2025.
Institutional Investors Stay Optimistic
Despite recent volatility, institutional players remain optimistic. On January 7, publicly traded company KULR Technology Group announced its projection that Bitcoin could exceed $200,000 in 2025 after the firm capitalized on the recent dip, purchasing Bitcoin at $97,000.
As 2025 unfolds, Bitcoin’s trajectory will likely hinge on the interplay between U.S. fiscal policies, Federal Reserve decisions, and the pace of regulatory developments. While challenges remain, the substantial liquidity injection could provide a strong foundation for Bitcoin’s growth in the early months of the year.
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