Author | Heimi, Baise Research InstituteAt the time of writing this article, Bitcoin has risen by over 6% in the past 24 hours, briefly reaching $29000. At the same time, Bitcoin regained 50% of the entire Cryptocurrency market

Author | Heimi, Baise Research Institute

At the time of writing this article, Bitcoin has risen by over 6% in the past 24 hours, briefly reaching $29000. At the same time, Bitcoin regained 50% of the entire Cryptocurrency market. It should be noted that since May 2021, Bitcoin's market dominance has never exceeded 50%.

I believe that the rise in the market and dominant position of Bitcoin in this round is mainly attributed to three aspects: the entry of financial giants into cryptocurrency trading, the resurgence of Bitcoin spot ETF competition, and the upcoming fourth halving of Bitcoin.

Under regulatory crackdown, financial giants enter encrypted transactions

EDXMarkets is an institutional specific exchange supported by three of the largest asset management companies in the United States, Charles Schwab, FidelityDigitalAssets, and CitadelSecurities. It was announced in September 2022 and officially launched yesterday, sparking heated discussions in the crypto community.

As a newly rich exchange with strong endorsement, EDX takes a cautious attitude towards the supervision of the U.S. Securities and Exchange Commission (SEC), focusing on safety and compliance.

On the one hand, the biggest difference between EDX and other exchanges is that it is an "unmanaged" exchange, which means it does not directly hold customers' encrypted assets and ensures the security of customers' funds through trustworthy intermediaries.

On the other hand, two major Cryptocurrency exchange, Coinbase and Coinsecurity, have recently been sued by the US SEC.

In the Coin Security lawsuit, the SEC classified ten tokens as securities, including SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI. In the Coinbase lawsuit, the SEC classified seven other tokens as securities, including CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO.

None of the above token EDX provides transactions. Customers can only trade four Cryptocurrency: BTC, ETH, LTC and BCH - SEC said they are not securities.

Therefore, EDX has refocused its institutional interest on the old Cryptocurrency, including Bitcoin.

Although some Twitter users believe that the timing of the SEC's recent lawsuits against Coin and Coinbase is worrying, many see the launch of EDX as positive news compared to the price of Bitcoin.

In addition, industry insiders speculate that after the SEC's enforcement actions, these financial giants launched exchanges not coincidentally. Suddenly, "these Wall Street giants entered the crypto market after the runway was cleaned up. The regulator first attacked the original Cryptocurrency exchange through litigation to create fear, and then let the financial giant swoop in. Perhaps regulatory agencies are more inclined to allow established companies to enter the encryption market, rather than supporting native companies in the encryption market from the beginning.

Bitcoin spot ETF competition resurges

Despite the SEC's crackdown on the encryption industry, traditional financial giants and institutional investors still showed interest in Bitcoin and accelerated their entry.

Previously, BlackRock, the world's largest asset management company, applied for Bitcoin spot ETF. If it passes, it will open a regulated investment channel for a wider range of investors without actually buying Bitcoin, and ultimately lead to the growth of demand and value of Bitcoin.

Markus Thielen, director of Cryptocurrency research of Matriexport, a digital asset service platform, said: "The US SEC is very likely to approve BlackRock's Bitcoin ETF... The ETF may be approved in September/October 2023, and will attract $10 billion in three months and $20 billion in six months - which will greatly support the price of Bitcoin."

Since BlackRock submitted its ETF application, the price of Bitcoin has risen by 12%, and Coinbase stock Coin has also risen by 12%.

Following closely is WisdomTree. Less than a week after BlackRock submitted its application, the asset management company with $87 billion in management again submitted its application for Bitcoin spot ETF. WisdomTree stated in the document: "The Bitcoin market has matured, and its operational efficiency and scale are substantially similar to mature stock, fixed income, and commodity markets

This is not the first application of WisdomTree. As early as December 2021, the US SEC rejected it for lack of "regulatory sharing agreement" and Market manipulation concerns.

In the past few years, many ETF issuers have attempted Bitcoin spot ETFs, but have been rejected by the SEC, including WisdomTree, VanEck, ProShares, Invesco, Valkyrie, and ARK.

Recently, there have been rumors that Fidelity, the third largest asset management company, is planning to cause an "earthquake" in the crypto market by applying for its spot Bitcoin ETF and possibly launching an acquisition of the struggling Grayscale. But Fidelity has not confirmed this rumor, and whether the company really willOn a grand scaleEntering the encryption market remains to be seen.

However, BlackRock's action may indeed attract the imitation of traditional financial giants, triggering another "Bitcoin spot ETF competition" after 2021, and Bitcoin may soon usher in its "golden moment" - after the first gold spot ETF was approved in the United States in 2004, its price has exploded in the next few years.

The upcoming Bitcoin halving

The upcoming fourth halving of Bitcoin will occur in 10 months (May 9, 2024), and block rewards will be reduced to only 3.125 Bitcoins. Halving Bitcoin is an important narrative of Bitcoin and a catalyst for the recent three bull markets. It halves the block rewards given to miners every four years, and after each halving, the number of Bitcoins mined at the same energy cost will decrease. Therefore, this often leads to strong speculation and expectations in the Bitcoin community regarding the price of Bitcoins.

From a historical perspective, every time this narrative arrives, it triggers Bitcoin and the broader crypto market to reach historic highs.

As shown in the figure below, the blue line, orange line, and green line represent the price trends of Bitcoin in three halved cycles from 2012 to 2016, 2016 to 2020, and 2020 to present.

It can be observed that all lines reached their maximum prices between the 400th and 600th days.

The most popular Bitcoin analyst, PlanB, believes that by halving for the fourth time, Bitcoin prices are expected to rise to over $32000 and start a new bull market cycle in 2025.

Finally, DYOR, delve deeper into any event.

Risk reminder:

According to the "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading and Speculation" issued by the Central Bank and other departments, the content of this article is only for information sharing and does not promote or endorse any business or investment behavior. Readers are requested to strictly comply with the laws and regulations of their respective regions and not participate in any illegal financial activities.