Can Bitcoin Maintain the 55000 Key Level Is the Cryptocurrency Market Set for a July Reversal

Is there a turning point in the cryptocurrency market?
After surviving the “Five Poverties and Six Extremes,” the cryptocurrency market did not welcome a reversal in July as expected. On the contrary, negative events such as the German government’s sale and Mt.Gox repayment have fueled investor panic, leading to a sharp decline in the entire cryptocurrency market due to Bitcoin’s decline.
At a time when investor confidence has been severely hit, multiple positive factors such as FTX’s $16 billion repayment plan, expectations of interest rate cuts, and the US election results are believed to potentially lead to a turning point in the cryptocurrency market starting from the fourth quarter of 2024.
FTX’s $16 billion repayment plan may drive the market to new highs
According to the revised restructuring plan and disclosure statement submitted by FTX to the US bankruptcy court in Delaware in May this year, the estimated total value of assets collected, converted into cash, and available for distribution is expected to be between $14.5 billion and $16.3 billion, surpassing the $11 billion owed by FTX to customers and other non-government creditors. The excess cash will be used to pay interest to the company’s more than 2 million customers.
If the plan is approved by the bankruptcy court, it is expected that 98% of FTX’s creditors will receive approximately 118% of their allowed claim amount within 60 days after the plan takes effect. However, due to differing opinions among FTX creditors, a consensus has not yet been reached on the method of compensation.
Currently, FTX has obtained court approval for creditors to vote on the compensation plan in cash or cryptocurrency. According to court documents, creditors must vote by August 16, and Judge Dorsey will decide whether to approve the plan on October 7. Once the restructuring plan is approved by the court, FTX will repay the creditors within two months. Based on the timetable, it is expected that FTX’s repayment will be around the fourth quarter of 2024 to the first quarter of 2025.
Although the final method of compensation has not been determined, cryptocurrency analyst Ash Crypto believes that since most of FTX’s customers are cryptocurrency enthusiasts, the massive $16 billion funds will enter the cryptocurrency market and become the biggest catalyst for price increases. Bitcoin is expected to break through $120,000, Ethereum will surpass $12,000, and other altcoins will rise by more than 10 to 50 times.
Expectations of interest rate cuts rise this year, with a probability of more than 70% in September
Rate hikes and rate cuts by the Federal Reserve are important factors affecting Bitcoin prices, and rate cuts often drive market strength.
Recently, Fed Chairman Powell stated that recent pressure on US inflation has eased, but the Fed still needs more data to prove that inflation risks have passed before deciding on interest rate cuts. If interest rates are cut too early, inflation may rise again; if interest rates are cut too late, it could lead to economic slowdown and recession.
Although Powell stated that the timing of interest rate cuts is still uncertain, with the latest data showing a slowdown in US economic growth, such as a significant downward revision of US non-farm payroll data in June and an increase in the unemployment rate to 4.1%, the highest level since November 2021, expectations of interest rate cuts have increased.
For example, analysts at Citigroup predict that the Fed will start cutting interest rates by 25 basis points at each meeting starting in September, with a total of eight interest rate cuts until July 2025. This will lower the benchmark interest rate by 200 basis points, from the current 5.25%-5.5% to 3.25%-3.5%, and keep it unchanged for the remaining time in 2025. QCP Capital also stated in its latest market analysis that US employment data shows downward revisions for April and May, confirming Powell’s path of monetary tightening and the possibility of early interest rate cuts, increasing the probability of rate cuts in September and December. In addition, in the latest Fed meeting, 7 out of 19 officials predicted that the Fed would cut interest rates once this year, and 8 supported two rate cuts.
According to the FedWatch Tool from CME Group, as of July 9, the market expects a 73.6% probability of the Fed cutting interest rates at the September meeting, with a 22.9% probability of no change.
The US’s first cryptocurrency accounting system will take effect in 2025
In December of last year, the Financial Accounting Standards Board (FASB) in the US announced the first edition of cryptocurrency accounting rules. Companies holding Bitcoin or Ethereum must record the value of their holdings at fair value, and changes will be reflected in net income. The new rules will take effect for fiscal years beginning after December 15, 2024, and apply to both listed and non-listed companies in 2025.
For cryptocurrency assets, the change in accounting standards means that companies like MicroStrategy, Tesla, and Block will be able to record the high and low points of the value of their cryptocurrency holdings. Under the new regulations, companies holding cryptocurrencies such as Bitcoin or Ethereum will need to record these tokens at fair value, which is the latest market value, and changes in fair value will be directly reflected in net income.
In response, MicroStrategy founder Michael Saylor commented that this move will promote the adoption of Bitcoin as a treasury reserve asset by global companies. Former PayPal President David Marcus also believes that the new regulations will eliminate a major obstacle for companies to include Bitcoin on their balance sheets, marking an important milestone for Bitcoin.
Trump’s chances of winning the election increase, and cryptocurrency becomes a new chip in the election
2024 is an election year, with the US election attracting the most attention worldwide. Cryptocurrency has become an important issue in this election. Not only has Trump shown a positive embrace of cryptocurrencies, even stating that he wants to be the “Cryptocurrency President,” but the Biden administration has also sent friendly signals. The shift in US political sentiment has had a positive impact on the development of the cryptocurrency market.
Currently, the speculation about Biden’s withdrawal from the election continues to ferment, with some Democratic members of the US House of Representatives calling for Biden to withdraw, and Senator Warner leading the push for Biden to drop out. Although Biden has publicly refused to withdraw, Trump’s chances of winning have significantly increased after the first televised debate, and he has raised $331 million in the second quarter, surpassing the $264 million raised by Biden and the Democratic National Committee.
Trump’s victory is believed to bring new upward momentum to the cryptocurrency market. Standard Chartered Bank stated that August 4 is a key date for Biden’s decision, and if he drops out, it will bring policies more favorable to the cryptocurrency market, potentially driving Bitcoin to new highs. They also predict that Bitcoin will reach $200,000 by 2025.
In addition, the official platform of the Republican National Committee for the 2024 US election states that they will support multiple policy measures beneficial to cryptocurrency companies and holders. The Trump campaign team’s official document released recently states that the Republican Party’s “Make America Great Again” platform pledges to end “illegal and un-American attacks” on the US cryptocurrency industry and promises to “defend Bitcoin mining rights” and allow cryptocurrency holders to self-custody their tokens. It also opposes the creation of central bank digital currencies (CBDCs). The document states, “We will defend the right to transact without government surveillance and control.”
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