What are the current positive factors in the cryptocurrency market?

Written by: Mu Mu

Recently, the cryptocurrency market has faced severe correction pressure, but many early Bitcoin participants (OGs) still believe that the current bull market has not fully unfolded. Their reasoning is that although Bitcoin reached over $100,000 in early 2025, its performance has not been as crazy as in previous bull markets. Of course, predicting the future is very difficult, but there are four key points in 2025 that may determine whether Bitcoin can reach over $100,000 again and initiate a full bull market…

Strategic Bitcoin Reserves

Discussions about governments viewing Bitcoin as a strategic asset are increasing. In 2024, U.S. Senator Cynthia Lummis and Trump proposed establishing a national digital asset reserve. Additionally, El Salvador has recognized its Bitcoin reserves as national assets, and other countries like Germany and Japan are also discussing similar policies. However, ideals are rich, while reality is thin. The federal strategic Bitcoin reserve promoted by Trump, as well as the strategic reserves proposed by various state government legislators, will face significant obstacles. Even within Trump's Republican Party, there are many disagreements, not to mention the Democrats. Recently, Trump reiterated the strategic reserve on social media, and the upcoming crypto summit on March 7 has slightly boosted market confidence, at least indicating his firm stance. Given the current situation, if Trump insists, there is a possibility of implementation. Even if it does not pass through congressional legislation, it could be introduced through executive orders to bypass resistance, starting with a mini version of the strategic Bitcoin reserve. Of course, once the U.S. strategic reserve is solidified, regardless of its size, it will be a milestone event, prompting countries and regions worldwide to carefully consider whether to follow suit.

Interest Rate Cuts and Loose Monetary Policy

Sufficient liquidity is a prerequisite for a bull market, and there is still room for "interest rate cuts" this year. As of March 2025, the Federal Reserve has maintained interest rates between 4.25% and 4.5%, with market expectations for possible rate cuts later in 2025. Economists predict that if economic data is weak, the Federal Reserve may cut rates in May or July. Trump's tariffs on Canada, Mexico, and China in February 2025 have triggered a trade war, potentially bringing significant pressure for an economic recession. This may also force the Federal Reserve to cut rates further to stimulate the economy. Research shows that Bitcoin prices are highly correlated with global M2 money supply growth, with a correlation coefficient of 0.94. Historical trends indicate that M2 growth typically drives Bitcoin prices up, especially when liquidity increases and interest rates decrease. Cryptocurrency analyst Bitcoindata21 stated in a post on February 25: "A weak dollar has a net positive impact on global M2; it's only a matter of time before Bitcoin achieves this." Similar views were expressed in a post by Colin Talks Crypto, who stated: "Global M2 money supply predicts significant changes for Bitcoin."

Regulatory Framework and Stablecoin Legislation

At the beginning of 2025, the market value of stablecoins exceeded $200 billion, attracting global regulatory attention. The European Union implemented the MiCA regulation in January 2025, while the U.S. Congress is reviewing related stablecoin legislation such as the Clarity for Payment Stablecoins Act and the Lummis-Gillibrand Payment Stablecoins Act. In the past two months, more and more crypto projects and exchanges have announced that their previous lawsuits with the SEC have been withdrawn, indicating that a friendly regulatory environment is likely to bring about a favorable regulatory framework. The establishment of a crypto regulatory framework and stablecoin legislation will provide more regulatory clarity and certainty, creating conditions for traditional financial institutions, which are already "eager," to enter the crypto market and compete directly with profitable stablecoin issuers like Tether, bringing in more funds and liquidity.

Ethereum is Key to the Altcoin Bull Market

Paradigm called for Ethereum core developers to accelerate protocol upgrades in late January, achieving more milestones on its technical roadmap to maintain its leading position as the top Layer 1 blockchain. The Ethereum ecosystem has the most momentum in the crypto space, especially with the advancement of Web3 applications. In short, "there are many real doers and projects," which is the source of endless expectations.

Therefore, many times when Ethereum rises, most related ecosystems like DeFi also collectively increase, and competing public chains similarly benefit from this effect. Thus, Ethereum is very important for a full bull market. Ethereum seems to be taking action, and there will likely be changes in 2025: 1) The transformation of the Ethereum Foundation is evident, as we have seen the foundation increasing its investment in DeFi and making personnel adjustments to maintain its position as a leading Layer 1 blockchain. Of course, transformation is a good thing, but the crypto ecosystem cannot rely entirely on the Ethereum Foundation; Ethereum is not a company, and the foundation is merely a supportive organization that can at most assist in ecosystem growth but cannot control this decentralized ecosystem. 2) Accelerated Upgrades: Recently, some developers in the Ethereum community have indicated at several Ethereum developer meetings that they will speed up protocol upgrades. The main upgrade, Pectra, is set to launch on the mainnet in April 2025, and this upgrade may be the largest in history, including up to 20 Ethereum Improvement Proposals (EIPs), such as EIP-3074 to enhance transaction efficiency and EIP-7002 to optimize validator operations. The next upgrade, Fusaka, will complete scope confirmation on April 10. Each significant upgrade of Ethereum brings good expectations before and after its implementation; how will this one turn out? Previously, some analysts believed that the current risk-reward ratio for Ethereum is high, and compared to some leading projects, it has been stagnant. Once it makes new progress or changes, it is likely to reverse the downturn.

Conclusion

The potential positives this year still exist, and the possibility of Bitcoin challenging $100,000 again remains high, though changes cannot be ignored. It can only be said that the probability of strategic reserves being implemented is somewhat higher, while the expectations for interest rate cuts are still uncertain. The regulatory framework and related legislation do not seem to have major issues, and Ethereum's transformation and upgrades will also create favorable conditions. Overall, it is still worth looking forward to.

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