Can Bitcoin Hold the 55000 Threshold Is the Cryptocurrency Market Poised for a July Rebound

Is there a turning point in the cryptocurrency market?
After surviving the “Five Empties and Six Desolations,” the cryptocurrency market did not see the expected turnaround in July. 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 investor confidence takes a hit, multiple positive factors such as FTX’s $16 billion repayment plan, expectations of interest rate cuts, and the outcome of the US election suggest that the cryptocurrency market may turn around starting in the fourth quarter of 2024.
FTX’s $16 billion repayment plan may drive the market to new highs
According to FTX’s revised restructuring plan and disclosure statement submitted to the US bankruptcy court in Delaware in May, the total value of assets collected, converted into cash, and available for distribution is expected to be between $14.5 billion and $16.3 billion. This exceeds FTX’s debts to customers and other non-government creditors of $11 billion, and 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 claims within 60 days after the plan takes effect. However, due to differences of opinion among FTX’s creditors, a consensus has not been reached on the method of compensation.
Currently, FTX has obtained court approval for creditors to vote on the compensation plan, either in cash or in 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 plan is approved, FTX will repay its creditors within two months. Based on the timetable, FTX is expected to repay its debts in the fourth quarter of 2024 or 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 surpass $120,000, Ethereum will surpass $12,000, and other altcoins will rise by more than 10 to 50 times.
Expectations of interest rate cuts increase, with a probability of a rate cut in September exceeding 70%
Interest rate hikes and cuts by the Federal Reserve are important factors affecting Bitcoin prices, and rate cuts often boost the market.
Recently, Federal Reserve Chairman Powell stated that recent US inflation pressures have eased, but the Fed still needs more data to prove that inflation risks are behind us before deciding on rate cuts. If rate cuts are implemented too early, inflation may resurface; if rate cuts are implemented too late, it may lead to economic growth slowdown and trigger a recession.
Although Powell stated that the timing of rate cuts is still uncertain, with the latest data showing a slowdown in US economic growth, such as the significant downward revision of US nonfarm payroll data in June and the unemployment rate rising to 4.1%, the highest level since November 2021, expectations for rate cuts have increased.
For example, analysts at Citigroup predict that the Federal Reserve will start cutting rates by 25 basis points at each meeting from September, with a total of eight rate cuts until July 2025. This would 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 to monetary tightening and the possibility of early rate cuts, with increased probabilities for rate cuts in September and December. Additionally, in the latest Federal Reserve meeting, out of the 19 officials, 7 expect the Fed to cut rates once this year, and 8 support two rate cuts.
According to the CME Group’s FedWatch Tool, as of July 9, the market predicts a 73.6% probability of a rate cut at the September meeting, with a 22.9% probability of no change.
The first edition of the US cryptocurrency accounting standards 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 unlisted 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. According to 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. Changes in fair value will directly impact net income.
Regarding this, MicroStrategy founder Michael Saylor commented that this move will promote global adoption of 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 in their balance sheets, marking an important milestone for Bitcoin.
Probability of Trump winning the election rises, cryptocurrency becomes a new chip in the election
2024 is an election year, with the US election garnering the most attention worldwide, and the US presidential election will take place on November 5. Cryptocurrency has become an important issue in this election, with not only Trump showing a positive attitude towards cryptocurrencies and even stating that he wants to be the “crypto president,” but the Biden administration has also followed suit with friendly signals. The shift in the US political landscape has had a positive impact on the development of the cryptocurrency market.
Currently, the speculation about Biden dropping out of the race 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 drop out, Trump’s chances of winning have significantly increased after the first televised debate, and in the second quarter fundraising, Trump raised $331 million, 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 crucial date for Biden’s decision, and if he withdraws from the race, it will bring policies more favorable to the cryptocurrency market, potentially driving Bitcoin to new highs. They also predict that Bitcoin may 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 various policy measures favorable to cryptocurrency companies and holders. Trump’s campaign team stated in an official document released recently 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. Furthermore, they oppose the creation of central bank digital currencies (CBDCs). The document states, “We will defend the right to engage in transactions without government surveillance and control.”
This article is a collaboration and is republished from PANews.