In early July, Bitcoin may face many challenges. However, the comparison of long and short forces is expected to undergo a subtle change in mid-to-late July. Based on the collection and analysis of information from multiple sources, the author has preliminarily outlined the market scenario for July. So, how will Bitcoin stage this reversal drama?

Dark clouds gather, BTC faces many challenges at the beginning of the month

Recently, the US and German governments have frequently sold off Bitcoin and Ethereum, which has put considerable pressure on the market. In addition, Mt.Gox plans to start paying compensation in July 2024, which means that Bitcoin will be under huge selling pressure in early July.

According to data from blockchain analysis company Chainalysis, the U.S. government transferred about 3,940 bitcoins worth about $240 million to the Coinbase exchange on June 26. These bitcoins are likely to be derived from the illegal proceeds of drug dealer Banmit Singh, who was convicted in January 2024. Currently, the U.S. government holds about 214,000 bitcoins worth $13 billion, making it the world's largest bitcoin holder. On July 1, Arkham monitored the transfer of about 3,375 ETH from the U.S. government wallet address to a certain address, equivalent to about $11.72 million.

According to Bitpush, the German Federal Criminal Police (BKA) began transferring about 11,100 bitcoins worth about $72.4 million to cryptocurrency exchanges such as Kraken and Bitstamp in mid-June. These bitcoins were illegal gains seized by the German government in 2013. On July 1, Lookonchain monitored the German government transferring another 1,500 bitcoins ($94.7 million), some of which were transferred to Bitstamp, Coinbase and Kraken. Currently, the German government owns about 470,000 bitcoins, making it one of the countries with the largest bitcoin reserves in the world. The German government has always been cautious about cryptocurrencies and has repeatedly expressed concerns that they may be used for illegal activities. It is worth noting that Germany is formulating cryptocurrency regulatory regulations, which are expected to take effect in 2025. The sell-off may be a signal from the German government to the market, indicating its stance on cryptocurrencies.

In addition to the government sell-off, Mt.Gox's compensation is also a major source of pressure. According to the official website, Mt.Gox's compensation plan includes basic compensation and proportional compensation. The basic compensation part allows each creditor to pay the first 200,000 yen in yen, and the proportional compensation provides two options: early lump-sum repayment or mid-term repayment and final repayment. Among them, the lump-sum repayment method can only allow creditors to receive partial compensation. For the part exceeding 200,000 yen, creditors can choose a mixture of BTC, BCH and yen or pay the full amount in legal currency. The latest news shows that Mt.Gox will start paying in July 2024.

Macroeconomic expectations improve, Ethereum ETF may inject new funds into the market

The author believes that several key factors that may lead to a reversal in Bitcoin in July include: the launch of the spot Ethereum ETF, the macro market environment, technological updates, and Trump’s potential support.

This week, there are many important events in the macro market, which are expected to have a positive impact on the crypto ecosystem. In early July, the United States will release a series of economic data such as the June ISM Manufacturing PMI, and central bank governors of many countries will also deliver speeches. The market expects that the SEC may respond to the ETH ETF in the week of July 8, which is likely to be good news. In addition, the quarterly delivery has just ended, and the implied volatility of major maturities is very low, providing a good opportunity for building positions.

According to current news, the Ethereum ETF may be launched as early as early July, which will inject new funds into the crypto market. Compared with Bitcoin, Ethereum has a richer ecosystem, and the inflow of new funds is expected to further promote the development of the Ethereum ecosystem.

Bitcoin may usher in a major technological update, and Trump is expected to help counterattack

Technological innovation has always been the core driving force for the development of Bitcoin and the crypto industry. Whether it is the past ICO, DeFi, Layer2, or the Ordinals protocol, BRC20, ARC20, etc. in the Bitcoin ecosystem, all reflect this. The author believes that the recent hotly debated OP_CAT will undoubtedly drive the great development of Bitcoin in the future.

The OP_CAT feature was proposed by Ethan Heilman and Armin Sabouri in October last year and was recently launched on the Bitcoin test network Signet and assigned the BIP-420 number. On July 1, Udi Wertheimer, CEO of Taproot Wizards, a supporter of OP_CAT, said that the probability of OP_CAT being activated was "close to 100%." ​​Many well-known figures in the crypto industry have also expressed their support for OP_CAT on social media. Taproot Wizards has launched the Quantum Cats Ordinals series to promote OP_CAT and released a white paper outlining the framework for building applications using OP_CAT. In addition, Starknet also stated that it will try to expand the execution layer of Bitcoin and Ethereum at the same time. It can be seen that OP_CAT will inject new vitality into the Bitcoin ecosystem.

In addition to technical updates, Trump may lead a group of retail investors to pour into the Bitcoin market in late July. According to reports, former US President Trump is discussing giving a speech at the Bitcoin 2024 conference in late July. Considering Trump's previous remarks and actions, his participation in the Bitcoin conference is not groundless. He has expressed his support for cryptocurrencies many times before and promised to speak for cryptocurrency miners if he enters the White House. In addition, his campaign team also announced that it would accept cryptocurrency donations, which is seen as a statement of his high-profile embrace of the cryptocurrency industry.

Summary and Outlook

In summary, Bitcoin may be weak in early July, facing pressure from government selling and Mt.Gox compensation. However, with the improvement of the macro market, the launch of Ethereum ETF, the advancement of technological innovation and Trump's potential support, Bitcoin is expected to gradually strengthen in mid-to-late July. In particular, the launch of OP_CAT and Trump's support may become the core driving force for Bitcoin's rise. Finally, from the perspective of seasonality, Bitcoin is also expected to rise in July. Therefore, the author is optimistic about the trend of Bitcoin in July.

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