Ethereum and Bitcoin enter a historically strong Q1 period, will markets get a boost this time?

Bitcoin (BTC) and Ethereum (ETH) are heading into a historically strong period for total gains. In Q1, especially in the year after a halving, both assets ended the period with net gains. 

The first quarter of 2025 holds special expectations for both Bitcoin (BTC) and Ethereum (ETH). For BTC, historical data shows the first three months of a post-halving year are usually a period of positive developments. 

BTC is yet to show if it will retain the trend, as its price action has been determined by a new set of factors. On the one hand, there is a strong trend of long-term holding, especially with messages from MicroStrategy that its BTC reserves would not be sold. On the other hand, the quarterly net gains may be small as volatile price moves cancel out. 

BTC quarterly net gains are slowing down as volatility decreases historically. | Source: BitBo

The performance of BTC was questioned after the recent dip to $93,228.70, after a series of drawdowns. BTC has significant support above $87,000, but may still face panic-selling in case of a bigger drawdown. 

Historical patterns may not always predict BTC price moves. January holds the risk of net losses, especially after the enthusiasm and peak gains of 2024. Others expect the true bull rally to be delayed to February or March. 

Since 2020, BTC also posted smaller quarterly gains and losses, as the traders have found new trading strategies and avoid panic moves. However, even relatively stable range-bound trading can lead to losses. 

BTC has plenty of bullish indicators, such as depleted exchange reserves and potential strong long-term holders. In the short term, volatility may return for both spot and derivative traders, and there are still fears of a bigger drawdown.

In the short term, BTC still trades with high levels of greed-based decisions. The relatively small drawdowns continue to shift funds to new cohorts of holders, as retail has rejoined the trend of accumulation. BTC remains bullish expectations for 2024, with predictions ranging from $140,000 to $250,000.

Will ETH have a year in the green? 

Ethereum (ETH) spent 2024 with increased usage, based on DeFi, stablecoins, and L2. The ETH price remained range-bound, only briefly breaking above the $4,000 level. 

January is a predominantly positive month for ETH, with two exceptions – deep drawdowns in 2019 and 2022. This month, ETH accrued losses of 3.42% so far, with the chance to change the score in the coming weeks. In previous years, ETH saw the biggest drawdowns in June, July, and August. 

Historically, ETH also outperformed in Q1, often becoming the catalyst for another altcoin season. ETH enjoys significant demand from ETF and multiple forms of locking and staking, along with relatively low new token inflation. Funds often add to selling pressures, with rapid shifts in sentiment. ETH remains one of the tokens with significant social media representation and bullish expectations, though still underperforming against BTC.

The biggest fear for ETH is a longer time span. Over time, ETH has achieved at most two years of positive performance in a row, ending the third year of the cycle with losses. In 2025, ETH enters with bullish predictions, expecting to break out to a new price range. However, drawdowns may break the rally, while also revealing the ongoing problems for Ethereum’s network. 

Additionally, ETH grew by over 96% in 2023 but slowed down its growth to just 43% in the more bullish 2024. ETH faced controversies from L2 usage, while Solana and Base gained as the more widely adopted chains. 

Ethereum remained the leader due to the passive usage of ETH as collateral, as well as the large supply of USDT. The chain mostly carried USDT transactions and Uniswap activity, based on the top smart contracts.

The only benefit for ETH is the expectation of catching up to the growth of BTC. In the short term, attitudes toward ETH were bullish both from retail and professional traders.

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