What three major factors will drive BTC price above $125,000 in Q1?

Author: Frances Yue, Market Watch; Compiler: Deng Tong, Golden Finance

Bitcoin could rise to an all-time high above $125,000 in the first quarter, or it could fall to $77,000 — the key will be whether President-elect Donald Trump cashes in on the cryptocurrency industry soon after taking office, one analyst says commitment.

John Glover, chief investment officer of crypto lending platform Ledn and former managing director of Barclays Investment Bank, said that according to the technical analysis tool Elliott Wave Theory, Bitcoin is expected to fall to $89,000 before breaking through $125,000 in the first quarter of 2025.

The Elliott Wave Theory states that asset prices consist of five waves in the direction of the main trend and three corrective waves against the trend in each cycle. Each corrective wave is followed by a wave in the direction of the main trend.

“Earlier this week we saw Bitcoin fall below $92,000, so we may have completed the correction wave before heading towards $125,000,” Glover said in a phone interview.

Glover said that if Bitcoin breaks above $125,000, it could experience another pullback before approaching a cycle high of $160,000.

Glover said Bitcoin could see a correction ahead of Trump 's inauguration on January 20 as investors take profits.

Cryptocurrency bulls expect the regulatory environment to become more favorable during Trump’s presidency. They are watching to see if the new president will soon follow through on his promises to the cryptocurrency industry, especially his promise to establish a strategic Bitcoin reserve in the United States, although Trump has yet to detail any specific plans.

Glover said that if Trump does not take any action to fulfill his promises in the early days of his administration — especially in his first 100 days in office — Bitcoin could see a correction. Politicians and analysts often look to an administration's first 100 days as a measure of the effectiveness and impact a new U.S. president is likely to achieve.

However, Glover noted that based on technical setup, Bitcoin is unlikely to fall below $77,000.

Analysts at blockchain data platform Glassnode said investors should also pay close attention to the $87,000 level, which is Bitcoin's short-term holding cost basis assuming the cryptocurrency is reasonably valued. This “on-chain” analysis examines data recorded directly on the blockchain network to gain insights into market trends or investor behavior.

Analysts pointed to a demand gap between $87,000 and $71,000, making the former a "make or break" level for Bitcoin's short-term price. Glassnode analysts say this level acts as support in an uptrend; however, if decisively broken, Bitcoin’s price could turn into resistance, signaling a shift in market sentiment.

Another key catalyst for Bitcoin in January could be portfolio rebalancing by financial institutions, QCP Capital analysts said. Hedge funds and asset managers often choose to rebalance portfolios in January to develop year-round strategies, adapt to market conditions and optimize tax implications.

QCP analysts note that allocations to Bitcoin are likely to increase this year as more institutions adopt Bitcoin after the launch of spot Bitcoin exchange- traded funds last year and as strategists expect the regulatory environment for cryptocurrencies to become more good.