Bitcoin could surpass $125,000 or fall towards $77,000 this quarter, depending on what Trump does next.
These are three main factors that could drive Bitcoin's price in the first quarter.
Bitcoin could rise to a historic high above $125,000 or fall towards $77,000 in the first quarter, and the key is whether President-elect Donald Trump will fulfill his promises to the cryptocurrency industry shortly after his inauguration, an analyst said.
, the largest cryptocurrency, has been wobbling below the $100,000 milestone for the past few days, after reaching a record of $108,309 on December 17, according to Dow Jones Market Data.
According to Elliott wave theory, a technical analysis tool, Bitcoin is expected to experience a drop towards $89,000 before surpassing $125,000 in the first quarter of 2025, according to John Glover, investment director of cryptocurrency lending platform Ledn and former managing director of Barclays Investment Bank.
Elliott wave theory suggests that the price of an asset in each cycle consists of five waves in the direction of the main trend and three corrective waves against the trend. Each corrective wave follows a wave in the direction of the main trend.
"We saw a drop in Bitcoin below $92,000 earlier this week, so it is possible that we have already completed the corrective wave before heading towards $125,000," Glover said in a phone interview.
If Bitcoin surpasses $125,000, it could experience another pullback before heading towards a cycle peak near $160,000, Glover said.
Bitcoin could experience a pullback before Trump's inauguration on January 20, as investors take profits, Glover said.
Cryptocurrency enthusiasts expect the regulatory environment to become more favorable under Trump's presidency. They are watching closely to see if the incoming president will soon fulfill his promises to the cryptocurrency industry, particularly his promise to build a strategic reserve of Bitcoins in the United States, although Trump has not detailed any specific plans.
If Trump does not take action to fulfill his promises in the early days, especially in his first 100 days in office, Bitcoin could experience a pullback, Glover said. Politicians and analysts often use the first 100 days of an administration as a benchmark to gauge the likely effectiveness and impact of incoming U.S. presidents.
Nonetheless, it is unlikely that Bitcoin will fall below $77,000 according to the technical setup, Glover noted.
Investors should also closely monitor the $87,000 level, the short-term holder cost of Bitcoin assuming that the cryptocurrency is fairly valued, according to analysts at the blockchain data platform Glassnode. This type of "onchain" analysis examines data recorded directly on a blockchain network to gain insights into market trends or investor behaviors.
There is a demand gap for the price of Bitcoin between $87,000 and $71,000, making the former a "decisive" level for Bitcoin's price in the short term, analysts noted. The level acts as support during bullish trends; however, if decisively broken, the price of Bitcoin may move to resistance, indicating a shift in sentiment, according to analysts at Glassnode.
According to analysts at QCP Capital, another key catalyst for Bitcoin in January could be portfolio rebalancing by financial institutions. Hedge funds and asset managers often choose to rebalance their portfolios in January to set strategies for the year, adapt to market conditions, and optimize tax implications.
Allocations to Bitcoin are likely to increase this year, as more institutions adopted Bitcoin last year after spot Bitcoin exchange-traded funds were launched, and strategists expect the regulatory environment for cryptocurrencies to improve, analysts at QCP noted.