Why is the $30,000 pressure level so important? XRP may serve as the flag bearer in the next bull market

After the SEC filed a lawsuit against Binance and Coinbase , the crypto market was in a panic. The "Wolves of Wall Street" were eager to enter the market. In addition, Hong Kong firmly embraced the blockchain industry. The crypto market rebounded strongly, but why did Bitcoin hesitate around $30,000? And why is the $30,000 position so important? Who will become an important promoter to break the deadlock?

June reverses, where will Bitcoin go in July?

Since the SEC sued Binance and Coinbase, the crypto market has fallen into panic, and the price of Bitcoin has been falling. However, just when people were still in shock, a group of "Wolves of Wall Street" showed their eagerness to enter the market. According to BitPush, on June 15, asset management giant BlackRock submitted a Bitcoin ETF application to the SEC; on June 19, Arch Public co-founder Andrew Parish 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 and Charles Schwab, announced its launch; on June 22, Bloomberg senior ETF analyst Eric Balchunas tweeted that asset management giant Invesco also resubmitted its spot Bitcoin application; on June 23, the SEC approved Volatility Shares' 2x Bitcoin Strategy ETF (BITX) to take effect, becoming the first leveraged cryptocurrency ETF in the United States.

Many people originally thought that the United States did not welcome crypto trading, but with a number of Wall Street institutions eager to rush in, more and more people began to think that this might just be a conspiracy between the SEC and Wall Street to "change the cage and replace the bird" - to drive Binance and others out of the US market and let Wall Street institutions enter. At the same time, Hong Kong seized the opportunity to extend an olive branch to many crypto exchanges, and acted quickly. According to BitPush, on June 23, Hong Kong Financial Secretary Paul Chan Mo-po made it clear in an interview with Ta Kung Pao that how to bring virtual asset service providers under appropriate regulation, protect the interests of investors, and maintain financial stability and security is the focus of the SAR government. On June 21, Lin, head of Deribit Asia Pacific, tweeted that Standard Chartered Bank had successfully opened an account for a certain exchange in Hong Kong; on June 26, HSBC, Hong Kong's largest bank, allowed its customers to buy and sell virtual asset ETFs listed on the Hong Kong Stock Exchange.

Stimulated by a series of good news, market sentiment reversed, and Bitcoin and other currencies rebounded immediately. But when it came to the important price range of $30,000, the market began to hesitate. So is this rise driven by short-term sentiment, or is it the beginning of a bull market?

Why is the $30,000 position so important?

Has the bull market started? From an experience point of view, it should not have started yet. The experience mentioned in this article mainly refers to two aspects: 1. From the perspective of the bull-bear cycle in the past, the bull market is often short and the bear market is long. At present, it is probably in the tail stage of the bear market; the second experience is the four-year halving cycle of Bitcoin. According to the performance of the previous bull market, the bull market often has to wait until after the halving. If we further combine the macro and technical aspects, for example, the ETF applied by BlackRock will probably have a result in the first quarter of next year; the Fed's interest rate hike cycle will probably turn around in the first and second quarters of next year; Ethereum's Dencun upgrade is currently expected to be at the end of the year, so technology-driven application innovation will most likely have some outbreak points in the first and second quarters of next year. These arguments have been mentioned in previous articles and many big V's discussions, so this article will not repeat them; this article would like to mention the price position of "pay attention to $30,000". So why is this position so important? The ancients said: "In summer, prepare for furs, and in winter, prepare for boats." This means that you should prepare for things in advance; for investment, it means that you can't wait for the bull market to come before preparing. The reason behind this is that bulls are short and bears are long. Over the years, I have seen many people always miss the bull market in the expectation of a correction, and then rush in to stand guard at the top of the mountain when the bear market comes. The reason why Bitcoin is important at $30,000 is that it is likely to be the dividing point between bulls and bears; if it effectively breaks through the previous high, it will enter the early stage of the bull market, and if it fails to effectively break through, it will still be at the end of the bear market.

The bitcoin price around $30,000 was an important node when institutions began to suffer from a large-scale series of collapses in the last round. At that time, LUNA collapsed, directly dragging down Three Arrows Capital. Three Arrows Capital knew the crisis and tried to turn the tide, but the bubble was too big. Finally, Three Arrows Capital collapsed, which led to the bankruptcy of a number of crypto financial institutions. Last year, the FTX Empire also collapsed, and even a behemoth like DCG was once in danger. Therefore, it is not an exaggeration to call "Bitcoin falling below $30,000" the Waterloo of many crypto financial institutions. There are often similar positions in each previous bear market, and these positions often play the biggest "stumbling block" in the upcoming bull market. Let's take a further look at the importance of this position from the dimension of on-chain data.

Glassnode data shows that Bitcoin data always appears surprisingly similar in various cycles. In the 2021-2022 cycle, the $30,000 price level can be regarded as a "midpoint" to some extent, and it fluctuates up and down at this point. In the 2013-2016 cycle, $425 was also a "midpoint" very similar to the cycle, and so was $6,500 in 2018-2019. The "losing" supply at these price levels is highly similar.

A large number of Bitcoin transactions have occurred in the past 12 months, with a considerable amount of Bitcoin purchased between $15,000 and $30,000. Only 25% of the Bitcoin supply was acquired at prices above $30,000, and the transaction time was in 2021-2022.

Historically, this equilibrium point lasts for a period of time, which many Bitcoin analysts refer to as the "re-accumulation period". The previous "re-accumulation period" was characterized by a lack of macro market direction and often lasted for several months at this point. Whether it is still necessary to go through such a long and tortuous process to break this equilibrium point, Glassnode believes that it remains to be seen.

XRP may break the deadlock and become the leader of the bull market

Judging from the Bitcoin halving cycle, the US interest rate hike cycle, Ethereum's major technological upgrades, the historical cycles of bull and bear performance, and the ETF application deadlines of BlackRock and others, the first and second quarters of next year should be a relatively ideal time period for market performance; however, with the XRP case that has been pending for many years, the equilibrium situation of the crypto market at the "midpoint" position of Bitcoin is expected to be broken ahead of schedule, and XRP may also become the leader of the next bull market.

According to Bitpush, a U.S. federal judge pointed out in a ruling 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 profit. The court believes that institutional buyers reasonably expect Ripple to use the funds obtained from sales to improve the ecosystem of Ripple coins, thereby increasing the price of XRP. But for programmatic buyers, they cannot reasonably expect the same result because programmatic sales are blind transactions and buyers cannot know whether their money has flowed to XRP or other sellers. However, the court also supported the SEC's motion that institutional sales of tokens did violate federal securities laws.

Affected by this, XRP transactions have continued to rise recently. According to data disclosed by Kaiko on July 20, the transaction volume of XRP surpassed Bitcoin for the first time after years of silence. According to the transaction data ratio of 25 centralized exchanges counted by Kaiko, XRP accounted for 21% of the transactions, Bitcoin accounted for 20%, Ethereum accounted for 8%, and other cryptocurrencies accounted for 51%.

The court ruling on XRP has provided a reference for the legal sale of tokens in the crypto market to a large extent: when crypto token sales are securities and when token sales are not securities. In a sense, the XRP case is a very important milestone in the development of the crypto market, and regulatory clarity will point the way for the development of the crypto market; it is also worth noting that XRP has been in a lawsuit with the SEC in the last bull market. With the end of the SEC lawsuit, XRP may play the role of a flag bearer in the next bull market.