Dennis Liu, a partner at Momentum 6, recently took to X to share his optimistic outlook on Ethereum (ETH), forecasting that the cryptocurrency could soar to $14,000 by the end of 2025.
He emphasized the importance of the upcoming six months for ETH and hinted at a potential leadership role for it in the market as we move closer to mid-2024.
Ethereum’s Growth Potential
Liu noted that Ethereum has not been able to keep pace with Bitcoin in the current cycle.
However, he remains confident that this pattern is about to shift.
He believes that Ethereum is on the cusp of substantial growth in the near future.
According to Liu, Ethereum’s earlier struggle against Bitcoin can be largely attributed to timing issues in institutional investments.
While Bitcoin and its alternative coins often capture the attention of retail investors, he pointed out that institutional interest in Ethereum has been rising.
This increased focus has, in part, been fueled by the stability and utility offered by Exchange-Traded Funds (ETFs).
Liu suspects that institutional players have been biding their time, waiting for favorable market conditions, which he predicts will materialize in 2025.
Liu also suggested that recent shifts in U.S. Federal Reserve policy might be a catalyst for Ethereum’s ascent.
He referred to the Fed’s decision to ease balance sheet reductions since May 2024, which could signal a forthcoming liquidity boost.
This change may potentially unfold after Federal Open Market Committee (FOMC) meetings in January or March.
Historically, increases in liquidity have often resulted in positive movements in the ETH/BTC ratio.
Institutional Support and Market Trends
Reviewing a decade’s worth of market behavior, Liu revealed a pattern: Ethereum tends to outperform Bitcoin from January to June, while Bitcoin reclaims its lead from July to December.
For Ethan investors, he highlighted that the months leading up to June have traditionally offered the best opportunities for notable returns.
Moreover, Liu speculated about potential support from the Trump administration for Ethereum.
He pointed to the former president’s involvement in NFTs and a decentralized finance (DeFi) framework built on Ethereum.
Liu believes that anticipated changes in SEC leadership and the adjustment of DeFi regulations could spark a wave of enthusiasm among institutions, especially considering Trump’s possible election in November 2024.
Favorable policies toward crypto could provide an additional boost for Ethereum-centric DeFi projects.
Significant efforts in real-world asset (RWA) tokenization, particularly by major firms like BlackRock alongside leading DeFi platforms like AAVE and MakerDAO, underscore Ethereum’s vital role.
Liu emphasized that Ethereum is not caught up in speculative trends; it is poised for substantial institutional growth.
Future Predictions
Another encouraging sign for Ethereum is the recent uptick in ETF inflows.
Liu noted that starting in November 2024, institutional interest shifted toward positive inflows.
Institutions have reportedly funneled around $6 billion in net inflows into ETH from November to January, accounting for approximately 0.76% of ETH’s monthly supply.
This shift indicates a growing confidence among institutional investors, who seem to be acquiring Ethereum at a faster rate than Bitcoin.
Looking forward to 2025, Liu speculated that if Bitcoin’s value were to double to $200,000, Ethereum could potentially quadruple its value to $14,000, given its historical trend of outpacing Bitcoin.
He acknowledged that while diminishing returns could temper growth, Ethereum remains a strong investment opportunity.
In conclusion, Liu posits that a confluence of favorable factors—including rising ETF inflows, likely liquidity support from the Federal Reserve, pro-DeFi policies, and Ethereum’s seasonal strengths—creates an attractive environment for the cryptocurrency in the near term.
He encourages investors to take a proactive approach as the next few months may present a significant opportunity for those involved with Ethereum.
At the time of his announcement, Ethereum was trading at about $106,929, showcasing its potential for growth in this favorable climate.
Source: Bitcoinist
