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Bitcoin may face some heavy blows in early July, but the balance of power between long and short positions is expected to quietly shift in the latter half of the month. After considering various information, the writer has outlined the July scenario. So, what will Bitcoin rely on to turn the tide?
Dark clouds loom over the city, and BTC faces significant pressures at the beginning of the month
The US and German governments have been selling Bitcoin and Ethereum in recent times, which puts pressure on the market. At the same time, Mt.Gox’s compensation process will begin in July 2024, and Bitcoin is expected to face huge selling pressure in early July.
According to blockchain analysis company Chainalysis, the US government transferred approximately 3,940 Bitcoins worth about $240 million to the Coinbase exchange on June 26, 2024. Market analysts believe that these Bitcoins were most likely confiscated from convicted drug dealer Paul Singh in January 2024. The US government currently holds approximately 214,000 Bitcoins, worth $13 billion, making it the largest holder of Bitcoin among countries. On July 1, according to Arkham monitoring, the US government wallet address transferred approximately 3,375 ETH, equivalent to $11.72 million, to an address starting with 0x5ac4.
According to “Bit推” report, the German Federal Criminal Police Office (BKA) started transferring approximately 11,100 Bitcoins worth about $72.4 million to cryptocurrency exchanges such as Kraken and Bitstamp in mid-June. These Bitcoins were seized by the German government in 2013 as illegal proceeds. On July 1, according to Lookonchain monitoring, the German government transferred another 1,500 Bitcoins ($94.7 million), of which 400 Bitcoins ($25.3 million) were transferred to Bitstamp, Coinbase, and Kraken. Currently, the German government holds approximately 470,000 Bitcoins, making it one of the countries with the largest Bitcoin reserves. The German government has always maintained a cautious attitude towards cryptocurrencies and has expressed concerns about their potential use in money laundering and other illegal activities. It is worth noting that the German government is developing cryptocurrency regulations that are expected to take effect in 2025. The German government may want to send a signal to the cryptocurrency market by selling Bitcoins, indicating its stance on cryptocurrencies.
In addition to the continuous selling by the US and German governments, the main selling pressure still comes from Mt.Gox. According to the official website, Mt.Gox’s latest compensation plan for creditors includes basic compensation and proportional compensation. The basic compensation allows each creditor to claim up to 200,000 yen, which will be paid in yen. The proportional compensation provides two flexible options for creditors, namely “early lump-sum repayment” or “medium-term repayment and final repayment.” Among them, the lump-sum repayment method only allows creditors to receive partial compensation (approximately 21% of the funds they had locked on the platform during the hacking attack), and the part exceeding 200,000 yen can be paid in a mixture of BTC, BCH, and yen or in full in fiat currency. According to the latest news, Mt.Gox’s compensation process will begin in July 2024.
Positive macro expectations and Ethereum ETF to bring new funds to the cryptocurrency market
This article believes that several factors will contribute to Bitcoin’s comeback in July, including the launch of a spot Ethereum ETF, macro market conditions, technological updates, and potential support from Trump.
This week, there are many important events in the macro market, which are expected to have a positive impact on the cryptocurrency ecosystem. On July 1, the US released the June ISM Manufacturing PMI; on July 2, Federal Reserve Chairman Powell, ECB President Lagarde, and Brazilian Central Bank Governor Neto gave speeches at the ECB Central Bank Forum, and the Reserve Bank of Australia released the minutes of its June monetary policy meeting; on July 3, the US released the ADP Employment Report for June, as well as initial jobless claims for the week; on July 4, the Federal Reserve released the minutes of its monetary policy meeting, the UK held elections, and the ECB released the minutes of its June monetary policy meeting; on July 5, the US released the unemployment rate for June and non-farm payrolls for June.
Adam, a macro researcher at Greeks.live, stated in an article on X platform that this week (7/1-7/7) is a major macro week, with the most crucial event being the US unemployment rate and non-farm data on Friday. The macro market, which has been quiet for several days, is making a comeback, with important macro events every working day. In terms of cryptocurrencies, the market expects the SEC to respond to the ETH ETF on July 8, which is likely to be positive news. With the end of the quarterly settlement, major expiration dates have low implied volatility, making it a good opportunity for accumulation.
According to current news, the Ethereum ETF may go live as early as early July, injecting new funds into the cryptocurrency market. Unlike the scarcity of on-chain ecosystems for Bitcoin, the influx of new funds into Ethereum is expected to further promote the development of the Ethereum ecosystem.
Bitcoin may undergo significant technological updates, and Trump may support Bitcoin’s counterattack
The writer has always believed that technological innovation has been driving the development of Bitcoin and the cryptocurrency industry, whether it is ICOs, DeFi, Layer2, or Bitcoin’s ecosystem protocols such as Ordinals, BRC20, and ARC20. This article believes that the recent hot topic, OP_CAT, will undoubtedly drive the future development of Bitcoin.
OP_CAT, proposed by Ethan Heilman and Armin Sabouri in October last year, was recently launched on the Bitcoin test network Signet and assigned the BIP-420 number. On July 1, Udi Wertheimer, CEO of Taproot Wizards and a supporter of OP_CAT, stated during the Xverse podcast that the probability of OP_CAT being activated is “close to 100%.” Many well-known figures in the cryptocurrency industry, including Anatoly Yakovenko, co-founder of Solana Labs, added “BIP-420” to their usernames on the X platform. Taproot Wizards launched the Quantum Cats Ordinals series in February to promote OP_CAT. In April, Taproot Wizards released a white paper outlining the framework for building applications using OP_CAT. Earlier, Starknet stated on the X platform that it will attempt to scale the execution layers of both Bitcoin and Ethereum. It is evident that OP_CAT will inject new vitality into the Bitcoin ecosystem.
In addition to technological updates, Trump may lead a wave of retail investors’ funds into Bitcoin in late July. On June 25, Axios, a technology media outlet, cited two sources to report that former US President Trump is considering speaking at the Bitcoin 2024 conference in Nashville at the end of July. The Bitcoin 2024 conference, organized by Bitcoin Magazine, is scheduled to take place from July 25 to 27. Bitcoin Magazine representatives did not respond to requests for comment.
Considering Trump’s previous statements, his participation in the Bitcoin conference is not unfounded. According to a report by “Bit推” on June 12, Matthew Schultz, Executive Chairman of cryptocurrency mining company CleanSpark, revealed that several Bitcoin miners met with Trump at his Mar-a-Lago estate on Tuesday evening. Schultz pointed out that Trump claimed to love and understand cryptocurrencies, and the presence of Bitcoin miners helps stabilize the energy supply of the US power grid. Trump promised to speak up for cryptocurrency miners if he enters the White House. In addition, Trump himself posted on his Truth Social platform stating that Bitcoin mining is the last line of defense for the US against other central bank digital currencies, and he hopes that all remaining Bitcoins can be mined in the US. Earlier, Trump’s campaign team announced that they would accept cryptocurrency donations, which was seen as a high-profile embrace of the cryptocurrency industry.
Trump’s recent high-profile announcement of support for Bitcoin may be largely driven by campaigning needs, as the cryptocurrency market has a large following and capital support. Cathie Wood, CEO of US investment firm Ark Invest, stated that she plans to vote for the Republican candidate, former President Donald Trump, in this year’s US presidential election. Wood has long been a supporter of cryptocurrencies, and Trump’s recent expressions of strong support for the cryptocurrency industry are the main reasons why Cathie Wood is voting for Trump.
Summary
Let’s summarize Bitcoin’s July scenario. Overall, Bitcoin is expected to perform weakly in early July, mainly due to the selling pressure from the US and German governments and Mt.Gox compensation. At the same time, the first week of July is expected to inject some macro optimism into Bitcoin. As the market digests the Mt.Gox compensation and other factors, Bitcoin is expected to gradually strengthen. In late July, Trump is highly likely to inject strength into Bitcoin. Meanwhile, the core driving force for Bitcoin’s rise, OP_CAT, will truly promote the development of Bitcoin and its ecosystem.
Lastly, from a seasonal perspective, Bitcoin may also experience an upward trend. According to “Bit推” report, QCP Capital analysts stated in a report on Monday, “From a seasonal perspective, the median return rate for Bitcoin in July is 9.6%, and it often experiences strong rebounds, especially after a 9.85% decline in June. Many signs indicate that July will be bullish.” Coinbase analysts David Duong and David Han stated in their weekly report, “Positive seasonal factors in July and improved liquidity may support the market.”
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Author: Bitpush Asher Zhang
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