The cryptocurrency market appears to be approaching the final stages of its current bull cycle, according to a detailed analysis by CryptoQuant.

This cycle, which began in January 2023, is projected to peak by the first or second quarter of 2025. Experts have identified key indicators signaling a maturing market and have advised investors to remain cautious as the cycle progresses.

Indicators of Market Maturity

CryptoQuant analyst “Crypto Dan” highlighted that 36% of Bitcoin’s market cap consisted of coins traded in the past month during Q4 2024. While this figure is lower than past bull cycle peaks, it suggests the market is entering a critical phase. Analysts anticipate this percentage could increase significantly before the cycle concludes, typically a sign of overheating that precedes a bear market.

Source: CryptoQuant

“The long-term trend remains downward, which suggests the market is likely to reach its cycle peak by Q1 or Q2 of 2025,” Crypto Dan noted in a Jan. 6 report.

Divergent Predictions

CryptoQuant’s cautious outlook contrasts with more optimistic forecasts from other market analysts. Steno Research predicts 2025 will be a banner year for cryptocurrencies, with Bitcoin (BTC) and Ethereum (ETH) breaking all-time highs. Similarly, asset manager VanEck expects Bitcoin to peak at $180,000 and Ethereum to exceed $6,000 by year-end.

“By the cycle’s apex, Bitcoin could achieve record-breaking valuations, driven by investor confidence and potential regulatory advancements,” VanEck stated in a December blog post.

Federal Reserve and Liquidity Concerns

Some analysts are wary of potential roadblocks. Markus Thielen of 10x Research emphasized the Federal Reserve’s monetary policies as a critical factor influencing Bitcoin’s momentum. An upcoming Federal Open Market Committee (FOMC) meeting could introduce volatility, potentially dampening the bullish trend.

Bitcoin (BTC) price chart. Source:Bitcoin Liquid Index (BLX) viaBrave New Coin

Meanwhile, John Glover, Chief Investment Officer at Ledn, projected a short-term price correction for Bitcoin to $89,000 before rebounding above $125,000 later in the quarter. Reduced liquidity and resistance levels around $105,000 could also challenge sustained upward momentum.

Risk Management Urged

As Bitcoin currently trades near $99,000, analysts stress the importance of risk management. The market’s technical indicators reveal mixed signals. While the Directional Movement Index (+DI) shows a slight bullish trend, the Average Directional Index (ADX) remains weak, highlighting the need for increased momentum to break through resistance levels.

CryptoQuant’s report encourages investors to consider gradually liquidating positions as the market nears its cyclical peak. “Caution is advised, particularly for large holdings, as the final stages of the cycle often bring heightened risk,” Crypto Dan remarked.

Outlook for 2025

Despite these warnings, 2025 is shaping up to be a make-it-or-break-it kind of year in the cryptocurrency world. In addition to price action, other drivers such as innovative crypto ETFs and/or the establishment of a U.S. Bitcoin strategic reserve may likely define the sector’s future for years to come.

While the present bull run still has great potential for substantial gains, investors are advised to be cautious. The combination of optimistic forecasts and cautionary signals underlines the need for a balanced approach as the market matures.

While it is fun to throw bullish price predictions around for Bitcoin in 2025, keep it sensible, and don’t invest more than you can afford to lose. Timely, timeless advice.