Is the darkness about to end? Market trend forecast for 2025

The darkness is about to end, from the perspectives of [debt restructuring and tariffs, recession and interest rate cuts, risk assets or safe-haven assets, market participants], let's talk about the market trend in 2025.

Author: SANYUAN Labs

The darkness is about to end. From the four perspectives of [debt restructuring and tariffs, recession and interest rate cuts, risk assets or safe-haven assets, market participants], let me talk about my views on the market trend in 2025.

BTC tests the 77000 support, ETH falls below the 2000 support, more than 2 billion ETH on makerDAO are already on the brink of liquidation, ETF outflows, troubles never come singly, the Pectra upgrade on the testnet is also under attack. The market is debating whether it's a bear market trap or a bull market trap, with more and more people looking bearish in the future. Nasdaq fell by 4% in a single day, and the wave of recession is still ongoing. The probability of recession this year on Polymarket has risen to 40%. Coincidentally, it's just 312. Let me share some personal opinions and cheer everyone up:

First of all, let me state the conclusion: I am relatively optimistic. There is considerable short-term downward pressure this year, but I am optimistic about the future market.

1. Debt restructuring and tariffs

As we all know, Trump's main goal in taking office is to reduce debt, and the method is to increase revenue and reduce expenditure.

Everyone knows that throttling is DOGE.

In terms of open source, the important channels for government revenue are various taxes (the main source) and non-tax revenue (confiscated income, state-owned asset income, service charges, investment income). In the past few years, tax revenue has been around 30-40 trillion, with tariffs accounting for only 1-2%. However, compared with personal and corporate taxes, tariffs have a relatively large growth potential. Among non-tax revenues, confiscated income and investment income are also points of relatively large elasticity. It can be seen that Trump is shouting about tariffs every day. In addition to considering government revenue, the main purpose is to create growth opportunities for American companies, and it can also serve as a bargaining chip. Even if they are not ultimately imposed, they need to be exchanged for other interests.

However, in the era of globalization, the impact of tariffs is complex and may lead to increased costs for companies, supply chain disruptions, transmission to the consumer end, triggering inflation, and may also lead to pressure on the country's exports due to equivalent tariffs from other countries, increased financial market wait-and-see sentiment, and increased recession risks. Therefore, many people believe that Trump's tariff policy is mainly a coercive role. Whether or not tariffs are finally imposed, as long as they can bring about a revival of the American manufacturing industry, it is more worthwhile compared to the tariffs themselves.

2. Decline and Interest Rate Cuts

Currently, what the market is more afraid of is the uncertainty brought about by recession concerns. After all, Trump himself said there would be a transitional period of pain. But any uncertainty will eventually come to an end. The uncertainty brought by Trump will also gradually be accepted by the market. As policies and data become clearer, the fear of uncertainty will pass. Recession data can also serve as a catalyst for rate cuts.

The epic level of epidemic flood requires more time to digest, delaying this round of interest rate cuts, and also affecting this round of BTC cycle. For the heavily indebted US government, interest rate cuts are what they hope to see, but unfortunately inflation is stubborn. In addition to the aftermath of the previous flood, there are also issues such as energy prices, supply chain, and labor costs.

Looking at the data for February, the unemployment rate has slightly increased. The CPI data on Wednesday has become the focus of attention. If CPI shows a downward trend, the probability of a rate cut in June will be higher. Looking back at the frenzied bull market of 2021, it took off at the beginning of the rate cut cycle and ended before the footsteps of rate hikes arrived. Recession is definitely not what the Trump administration wants to see. If a serious recession indeed occurs, they will be historical sinners. However, if they can smoothly deleverage, they will be remembered by history. Therefore, what the Trump administration would prefer to see is: a controllable recession panic that reduces inflation, followed by a continuation of rate cuts. After all, learning from the lessons of Hoover, they do not want to allow the arrival of a recession. In addition, there is hope for a ceasefire in the Russia-Ukraine war this year.

Therefore, from the perspective of recession probability and rate-cut cycle, it is unlikely to go directly bearish, but a deep squat is possible.

3. Risk Assets or Safe-haven Assets

If we look at the performance of BTC in recent years, it is significantly correlated with the Nasdaq index. The market still considers it a risky asset. However, with the signing of the US strategic reserve, and more and more institutions starting to allocate BTC as an asset, the intensified recession risk has increased the demand for safe-haven assets, possibly increasing the market's recognition of BTC as a safe-haven asset.

4. Changes in Market Participants

In the previous BTC cycle, most of the liquidity providers were people who entered the market due to the money-making effect in the coin circle, with many being newbies. However, with market education, the ratio of old to newbies is gradually increasing. Additionally, with the approval of ETFs and the resolution of compliance issues, institutional funds have become the main source of liquidity. Institutions have different attitudes towards BTC; some may treat BTC as a tech stock to speculate on, while others see it only as part of a hedging strategy and do not value many altcoins. Some institutions hold BTC as a type of asset allocation for the long term.

Institutions, compared to retail investors, are less likely to be influenced by market sentiment, and have strong risk management capabilities, including long-term capital, which helps mitigate the volatility of BTC brought about by emotions.

Therefore, at the beginning of the interest rate cut cycle, the possibility of BTC directly going bearish to 30,000 to 40,000 is not high. There is even a conspiracy theory that institutions use everyone's recognition of past cycle experiences to create a bearish trend, forcing low prices to surrender their chips.

In short, my prediction for the future trend is mainly fluctuating in March and April, not ruling out a deep squat. We need to look at the data in May. There is a high probability of interest rate cuts in June, and the second half of the year looks promising.