Can Bitcoin Hold the Key Level of 55000 Is the Cryptocurrency Market Set for a July Rebound

Is there a turning point in the cryptocurrency market?
After surviving the “Five Poor Six Extreme” period, the cryptocurrency market in July did not see the expected turnaround. On the contrary, negative events such as the German government’s sale and the Mt.Gox repayment have caused panic among investors, leading to a sharp decline in the entire cryptocurrency market as Bitcoin tests new lows.
At a time when investor confidence is severely damaged, multiple positive factors such as the $16 billion FTX repayment plan, expectations of interest rate cuts, and the results of the US election suggest that the cryptocurrency market may turn around starting in the fourth quarter of 2024.
The $16 billion FTX 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 total value of assets that FTX expects to have collected, converted into cash, and available for distribution will be between $14.5 billion and $16.3 billion, exceeding the $11 billion owed to FTX 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 creditors will receive approximately 118% of their allowed claim amount within 60 days after the plan becomes effective. However, due to differences in FTX creditors’ opinions, 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 in cryptocurrency. According to court documents, creditors must vote before August 16, and Judge Dorsey will decide whether to approve the plan on October 7. Once the plan is approved by the court, FTX will repay creditors within two months. Based on the schedule, it is expected that FTX repayment will occur in 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 FTX 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 exceed $120,000, Ethereum will surpass $12,000, and other altcoins will rise more than 10 to 50 times.
Expectations for interest rate cuts increase this year, with a probability of a rate cut in September exceeding 70%
The Federal Reserve’s interest rate hikes and cuts are one of the important factors affecting Bitcoin prices, and rate cuts often drive the market to strengthen.
Not long ago, Federal Reserve Chairman Powell stated that recent US inflation pressures have eased, but the Federal Reserve 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 resurface; if interest rates are cut too late, it may lead to economic growth slowdown and trigger a recession.
Although Powell said that the timing of interest rate cuts is still uncertain, with the latest data from the US showing a slowdown in economic growth, such as a significant downward revision of the non-farm payroll data in June, and an increase in the unemployment rate to 4.1%, the highest level since November 2021, market expectations for interest rate cuts have also increased.
For example, analysts at Citigroup expect the Federal Reserve to start cutting interest rates by 25 basis points at each meeting starting in September, with a total of eight rate cuts until July 2025. This would reduce the benchmark interest rate by 200 basis points, from the current 5.25%-5.5% to 3.25%-3.5%, and remain 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 rate cuts, increasing the probability of rate cuts in September and December. In addition, in the latest Federal Reserve meeting, 7 out of 19 officials predicted that the Federal Reserve will cut interest rates once this year, and 8 supported two rate cuts.
According to the CME Group’s FedWatch Tool, as of July 9, the market expects a 73.6% probability of a rate cut at the September policy meeting, and a 22.9% probability of no change.
The first edition of the US cryptocurrency accounting system will take effect in 2025
In December last year, the Financial Accounting Standards Board (FASB) in the United States announced the first edition of cryptocurrency accounting rules, which require companies holding Bitcoin or Ethereum to record their value based on 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 unlisted companies in 2025.
For cryptocurrency assets, the change in accounting standards means that companies such as MicroStrategy, Tesla, and Block will be able to record the highs and lows of their cryptocurrency holdings. According to the new regulations, companies holding cryptocurrencies such as Bitcoin and Ethereum will need to record these tokens at fair value, which is the latest market value, and changes in fair value will be directly included in net income.
In response, MicroStrategy founder Michael Saylor tweeted that this move will promote global companies adopting Bitcoin as a treasury reserve asset. 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.
Probability of Trump’s victory rising, cryptocurrency becomes a new chip in the election
2024 is an election year, with the US election being the most watched in the world, and the US presidential election will be held on November 5. In this election, cryptocurrencies have become an important issue, with not only Trump showing a positive embrace of cryptocurrencies and even claiming to be the “crypto president,” but the Biden administration also following suit with friendly signals. The change in the US political landscape has brought positive impact on the development of the cryptocurrency market.
Currently, the speculation about Biden’s withdrawal from the election continues to ferment, with Democratic members of the US House of Representatives calling for Biden to withdraw from the presidential race, 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 in fundraising in the second quarter, Trump raised $331 million, surpassing the $264 million raised by Biden and the Democratic National Committee.
Trump’s victory is believed to bring new momentum to the cryptocurrency market. Standard Chartered Bank stated that August 4 is a key date for Biden to make a decision, and if he withdraws from the race, it will bring policies more favorable to the cryptocurrency market, possibly driving Bitcoin to new highs. The bank predicts that Bitcoin will reach $200,000 by 2025.
In addition, the Republican National Committee stated in its official platform for the 2024 US election that it will support multiple policy measures that are favorable to cryptocurrency companies and holders. The Trump campaign team’s official document released recently stated that the Republican Party’s “Make America Great Again” platform pledges to end the “illegal and un-American attacks” on the US cryptocurrency industry, and promises to “defend the right to transact without government surveillance and control.”