As the year progresses, Bitcoin is projected to potentially reach the significant milestone of $125,000, but according to CK Zheng, founder of the crypto hedge fund ZX Squared Capital, other cryptocurrencies are likely to outperform it. In a recent interview with CoinDesk, Zheng emphasized a key sentiment in the crypto market: “There’s a correlation between bitcoin and altcoins, but I think bitcoin dominance is going to go down.” He pointed out that a healthy crypto ecosystem cannot thrive with 60% of the market’s value tied up in Bitcoin.
The shift in market dynamics is facilitated by a more favorable attitude from the current administration towards the crypto sector, as opposed to its predecessor. Notably, the White House is exploring the idea of establishing a national crypto reserve while the Securities and Exchange Commission (SEC) has begun to ease its stance, dropping lawsuits against crypto firms like Kraken and Uniswap.
Zheng added, “New policies and regulations will come out and trigger a lot of new ideas for innovation and shake up the crypto industry.” Although he anticipates that the full impact may not emerge until 2025 and 2026, the implication is clear: a wave of innovation is on the horizon for the cryptocurrency landscape.
Particularly, Ethereum (ETH) and Solana (SOL) stand out as cryptocurrencies poised to benefit from this impending wave of innovation, especially if initiatives blending artificial intelligence (AI) with crypto take hold. The driving force, according to Zheng, is the need for smart contract blockchains to enhance their transaction throughput. This improvement is critical for Solana to maintain its appeal and for Ethereum to reclaim its leading position in the market.
In the short term, Bitcoin is expected to exhibit behaviors characteristic of a risk-on asset, fluctuating in alignment with other similar assets as the administration unveils new economic policies. Zheng remarked that macroeconomic influences would continue to dominate Bitcoin’s movements unless there is a significant development concerning a national crypto reserve, which could potentially be announced during the upcoming White House Crypto Summit this Friday.
Commerce Secretary Howard Lutnick shared insights on this potential initiative, stating, “A bitcoin strategic reserve is something the President’s interested in. He spoke about it all during the campaign trail, and I think you’re going to see it executed on Friday.” He clarified that while Bitcoin will be treated distinctly, other cryptocurrencies will be approached positively but with a different set of considerations.
Regardless of geopolitical factors such as tariffs against Mexico, Canada, and China, Zheng remains optimistic, suggesting that Bitcoin is unlikely to drop below the $75,000 threshold. He noted, “In the near term, things are quite choppy, but this is a good opportunity for long-term investors who have been waiting to allocate to Bitcoin.”
