Author: Mu Mu

Recently, the crypto market has faced severe retracement 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 a difficult task, but there are four key points in 2025 that may determine whether Bitcoin can once again reach over $100,000 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 often grand, while reality can be harsh. Whether it’s the federal strategic Bitcoin reserve promoted by Trump or the strategic reserves proposed by various state government legislators, they will face significant obstacles. Even within Trump's Republican Party, there are many disagreements, not to mention the Democratic Party. Recently, Trump reiterated the strategic reserve on social media and mentioned the upcoming crypto summit on March 7, which slightly boosted market confidence and at least indicated his firm stance. Given the current situation, if Trump persists, there is a possibility of implementation. Even if it does not pass through congressional legislation, it could be initiated through executive orders, launching a mini version of a 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 is maintaining interest rates between 4.25% and 4.5%, with market expectations for potential rate cuts later in 2025. Economists predict that if economic data weakens, 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 further cut rates 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 during periods of increased liquidity and declining interest rates. Crypto analyst Bitcoindata21 stated in a post on February 25: "A weak dollar has a net positive impact on global M2, and it’s only a matter of time before Bitcoin achieves this." Similar views were expressed in a post by Colin Talks Crypto, who noted: "Global M2 money supply predicts significant changes for Bitcoin."

Regulatory Framework and Stablecoin Legislation

At the beginning of 2025, the market capitalization 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, an increasing number of crypto projects and exchanges have announced that their previous lawsuits with the SEC have been withdrawn, suggesting that a friendly regulatory environment is likely to lead to a favorable regulatory framework. The establishment of a crypto regulatory framework and stablecoin legislation will bring more regulatory clarity and certainty, providing conditions for traditional financial institutions, which are already "eager," to enter the crypto market and compete directly with profitable stablecoin issuers like Tether, bringing more funds and liquidity.

Ethereum is Key to the Altcoin Bull Market

In late January, Paradigm called on Ethereum core developers to accelerate the protocol upgrade speed and achieve more milestones on its technical roadmap to maintain its leading position as a 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 infinite 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 go live 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 downward trend.

Conclusion

This year's potential benefits are still present, and the possibility of Bitcoin challenging $100,000 again this year remains high, though uncertainties 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 remain uncertain. The regulatory framework and related legislation do not pose 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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