Author: Asher Zhang, LianGuaiBitpushNews
After the SEC filed lawsuits against Binance and Coinbase, just as the cryptocurrency market was in panic, the “Wolf of Wall Street” was eager to enter the market. In addition, with Hong Kong firmly embracing the blockchain industry, the cryptocurrency market experienced a strong rebound. But why is Bitcoin hesitating around $30,000? And why is this position so important? Who will be the key driver to break the deadlock?
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Since the SEC filed lawsuits against Binance and Coinbase, the cryptocurrency market has been in panic, and the price of Bitcoin has been declining. However, just when people were still in shock, the “Wolves of Wall Street” showed a strong desire to enter the market. According to “LianGuai” report, on June 15, asset management giant BlackRock submitted a Bitcoin ETF application to the SEC; on June 19, Andrew LianGuairish, co-founder of Arch Public, revealed that Fidelity, the world’s third-largest asset management company, is suspected of considering acquiring Grayscale or applying for a Bitcoin spot ETF; on June 20, EDX Markets, a new cryptocurrency exchange supported by Citadel Securities, Fidelity Investments, Charles Schwab, and others, announced its launch; on June 22, Eric Balchunas, senior ETF analyst at Bloomberg, tweeted that Invesco, a giant asset management company, has resubmitted its Bitcoin spot ETF application; on June 23, the SEC approved the Volatility Shares 2x Bitcoin Strategy ETF (BITX), making it the first leveraged cryptocurrency ETF allowed in the United States.
Many people originally thought that the United States did not welcome cryptocurrency trading, but with a group of Wall Street institutions eager to enter, more and more people began to believe that this may just be a conspiracy of “changing birds in the cage” between the SEC and Wall Street—expelling Binance and others from the US market and allowing Wall Street institutions to enter. At the same time, Hong Kong seized the opportunity to extend an olive branch to many cryptocurrency exchanges, and the actions were swift. According to “LianGuai” report, on June 23, Hong Kong Financial Secretary Paul Chan Mo-po clearly stated in an interview with “Ta Kung Pao” that how to include virtual asset service providers in appropriate regulation, protect investor interests, and maintain financial stability and security is the focus of the government. On June 21, Lin, the head of Deribit Asia-Pacific, tweeted that Standard Chartered Bank has successfully opened an account for a Hong Kong exchange; on June 26, HSBC, the largest bank in Hong Kong, allowed its customers to buy and sell virtual asset ETFs listed on the Hong Kong Stock Exchange.
Stimulated by a series of positive news, market sentiment reversed; Bitcoin and other cryptocurrencies subsequently experienced a rebound. However, as the market reached the important price range of $30,000, it began to hesitate. So, is this rise driven by short-term sentiment or the start of a bull market?
Why is $30,000 such an important level?
Has the bull market started? From an experiential perspective, it should not have started yet. The experiences mentioned in this article mainly refer to two points: 1. Looking at the historical bull and bear cycles, bears tend to last longer than bulls, and we are currently in the late stage of the bear market; the second experience is the Bitcoin halving cycle every four years, based on the past performance of bull markets, bull markets usually occur after the halving. If we further consider the macro and technical aspects, such as the expected results of the ETF application by BlackRock in the first quarter of next year; the potential turning point in the Fed’s interest rate cycle in the first and second quarters of next year; and the anticipated Ethereum DenCun upgrade at the end of this year, it is highly likely that there will be some breakthroughs in technology-driven application innovation in the first and second quarters of next year. These arguments have been mentioned in previous articles and many discussions by prominent figures in the industry, and this article will not go into detail about them; what this article wants to emphasize is the importance of “paying attention to $30,000” as a price level. So why is this level so important? As the ancients said, “Prepare your fur coat in summer and your boat in winter,” which means that one should make preparations in advance. For investment, it means that one should not wait for the bull market to come before making preparations. The reason behind this is still that bears tend to last longer than bulls. Over the years, many people have missed the bull market while waiting for a pullback, and then they rush in when the bear market comes. The $30,000 level of Bitcoin is important because it is likely to be the dividing line between bull and bear markets; if there is an effective breakthrough above the previous high, it enters the early stage of the bull market, but if it fails to break through effectively, it remains in the late stage of the bear market.
Around the $30,000 level of Bitcoin is an important node where institutions began to experience a series of collapses in the previous cycle. At that time, the collapse of LUNA directly dragged down Three Arrows Capital. Three Arrows Capital knew the crisis and tried to reverse the situation, but the bubble was too big, and in the end, Three Arrows Capital collapsed, leading to the bankruptcy of many crypto financial institutions. Even the empire of FTX collapsed last year, and even behemoths like DCG were once in jeopardy. Therefore, it is not an exaggeration to call “Bitcoin falling below $30,000” the Waterloo of many crypto financial institutions. Similar positions have also appeared in previous bear markets, and these positions often play the role of the biggest “roadblock” in the upcoming bull market. Let’s further explore the importance of this level from the perspective of on-chain data.
Glassnode data shows: in different cycles, Bitcoin data always exhibits astonishing similarities. In the 2021-2022 cycle, the $30,000 price level can be seen as a “midpoint” to some extent, with fluctuations above and below this point. In the 2013-2016 cycle, $425 was also a very similar “midpoint” for that cycle, as was $6,500 in the 2018-2019 cycle. The “loss” supply levels at these price points are highly similar.
A large number of Bitcoin transactions have occurred in the past 12 months, with a significant amount of Bitcoin purchased between $15,000 and $30,000, and only 25% of the Bitcoin supply was acquired at prices above $30,000, with trading taking place between 2021-2022.
Historically, this balance point will last for a period of time, and many Bitcoin analysts refer to it as the “reaccumulation period.” The characteristic of the previous “reaccumulation period” is the lack of macro market direction, often lasting for several months at this point. Currently, whether breaking this balance point requires a long and tortuous process like this still needs further observation, according to Glassnode.
XRP may break the deadlock and become the leader of the bull market
From various dimensions such as the Bitcoin halving cycle, the US interest rate cycle, major upgrades to Ethereum, historical cycles of bull and bear performance, and the deadline for ETF applications such as BlackRock, the first and second quarters of next year should be an ideal period for market performance. However, with the long-pending XRP case over the years, the balanced situation of the cryptocurrency market at the “midpoint” of Bitcoin is expected to be broken ahead of time, and XRP may become the leader of the next bull market.
According to “LianGuai” report, a US federal judge ruled on July 14 that Ripple’s sale of XRP tokens through exchanges and algorithmic programs does not constitute an investment contract because programmatic sales do not meet the third point of the Howey test, which is a reasonable expectation of profits. The court believed that institutional buyers reasonably expected Ripple to use the funds obtained from sales to improve the XRP ecosystem and thereby increase the price of XRP. However, for programmatic buyers, they cannot reasonably expect the same result because programmatic sales are blind transactions and buyers cannot know whether their money flows to XRP or other sellers. However, the court also supported the SEC’s motion that institutional token sales did indeed violate federal securities laws.
As a result, XRP trading has been on the rise recently. According to data disclosed by Kaiko on July 20, the trading volume of XRP has surpassed Bitcoin for the first time in many years. According to Kaiko’s statistics on the trading data of 25 centralized exchanges, the proportion of XRP trading reached 21%, Bitcoin was 20%, Ethereum was 8%, and other cryptocurrencies accounted for 51%.
The court ruling on XRP provides a reference basis for the legal sale of tokens in the cryptocurrency market: under what circumstances does the sale of cryptographic tokens constitute securities, and under what circumstances does it not. In a sense, the XRP case is a very important milestone event in the development of the cryptocurrency market, and regulatory clarity will provide guidance for the development of the cryptocurrency market. It is also worth noting that XRP, due to its ongoing lawsuit with the SEC in the last bull market, may play a leading role in the next bull market as the SEC lawsuit comes to an end.
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