It's been an interesting quarter. A US judge on July 13th ruled in favour of Ripple Labs saying they did not violate federal securities law by selling its XRP token on public exchanges. This meant that for the first time ever, a precedent has been set and cryptocurrencies are not securities. The S.E.C. claim they will appeal the decision but as of yet no appeal has been made.
In the first month of this quarter we saw Bitcoin bounce between $30,000 and $31,000, ultimately being rejected from that resistance and coming back down towards the support trend line. We were hoping for a bounce off that support, up towards 31,000 and above. However, as predicted in my last post about Q2 this year, the price action has broken through that trend line of support and down towards the $26,000 mark.
We'll come back to the price action a little later on as we will discuss my predictions for the rest of the year and where will be going into 2024.
BlackRock Bitcoin Spot ETF
For now, let's discuss the second biggest news of the quarter, and that is BlackRock’s Bitcoin spot ETF. I've written whole article about whether BlackRock is good or bad for crypto you can find that in the articles list. Nonetheless, if you are a conspiracy theorist you would say that this quarter has shown the power of the largest asset manager in the world. The openness with how they advertise their ‘belief’ that Bitcoin is the future of digital finance, and how they would like to offer it to their substantial customer base, has added fuel to the fire. Making price action rise, which then brings in retail investors to jump on the bandwagon.
However, when they want to accumulate, they don't want to accumulate with these rising prices. I believe BlackRock caused the market to crash over the previous three months so they can accumulate as a much Bitcoin at a lower price, so when the halving comes and goes and the parabolic price action moves in 2024/25, they are there with their Bitcoin purchased at $20,000 not $30,000+.
The news of BlackRock applying for a Bitcoin spot ETF made price action jump from $26,000 to $31,000. The excitement coming from that news was inevitably going to make price action rise, the question for BlackRock was do they want to accumulate Bitcoin when it's on the rise? The answer is no, with the halving a little over 7 months away, time is of the essence. If we look back at the last three halving events, you would notice how price action doesn't move considerably between the having point and 6 months after. However, it doesn't ever become dramatically cheaper in that period. So, BlackRock strategy team obviously knew the news of them applying for a Bitcoin spot ETF would create pandemonium and a huge price rise. What they needed to create was a break down in price and it seems they've succeeded with price action dropping through the trend line of support down towards other critical support lines. Where the price stops, no one knows. But it will be interesting to see.
S.E.C. vs Ripple Labs Inc.
I think it's important to state that the Securities and Exchange Commission isn't a criminal justice institution, it's only civil and it can only impose financial penalties. Its jurisdiction only applies to US based companies. That's why you see them going after Ripple and Coinbase most famously.
There is already a Bitcoin spot ETF in Europe and in Hong Kong, however, when BlackRock announced their application with the S.E.C. the market exploded. I believe this demonstrates how key the American markets are when it comes to price action of cryptocurrencies.
That is why, when Ripple Labs Inc. heard that a US judge ruled a landmark victory for them, after a three-year legal battle, the market mooned. XRP was up 75% by late afternoon on the 13th of July, by the evening it was up 90%. The world was watching. The world's reacted to this US decision.
Ripple chief executive Brad Garlinghouse called the ruling “a huge win for Ripple but more importantly, for the whole industry”. All major US crypto exchanges re-listed XRP including Coinbase who are still currently under investigation by the S.E.C. Nevertheless, with this huge victory, Gary Gensler and the S.E.C., look to be on the losing side when it comes to the future of digital currency.
XRP's price mooned through several resistance lines all the way to $0.90, however, through September we saw a retrace back to the ascending triangle pattern that has been forming for about the last year.
Current Market Evaluation and Predictions
When we describe the market situation, it's always done in the price of Bitcoin. Most Altcoins follow the Bitcoin narrative. If we look at the Bitcoin chart, we can see we had only the third ever positive September in the coin’s history. Through July and August, we steadily came back down from $31,000 all the way to just above $25,000. Somewhere we stayed for about a month before we started seeing a resurgence all the way towards the $27,500 resistance line.
If we have a look at the Bitcoin monthly returns charts below you can see that in previous years, October has been a fantastic month for Bitcoin and November and December are also reasonably positive, especially in crypto summer and autumn years. It's impossible to say where price action may go, but it seems we have bounced off the critical support of $25,000 and broken through the resistance of $27,500. If we manage to breakthrough what seems to be quite a difficult resistance line at $31,000, that we may well be the catalyst for a run up to $40,000 before the end of the year.
There's been quite a contrasting view of what will happen before the halving. Blockstream CEO Adam Back, one of the crypto's early pioneers, is pretty confident Bitcoin will hit an all-time high of over $100,000 before Bitcoin's halving in April/May 2024. If this prediction is to be true, then we need the S.E.C. to grant all 24 applications for a Bitcoin spot ETF, allowing everyone the chance to get on the ladder. We will need price action to definitely hit between $40,000 and $50,000 before the end of the year. Lastly, we need some positive global macroeconomic news. Currently there seems to be zero positivity and if we combine that with the trial of Sam Bankman-Fried, crypto is not exactly being shown in a good light in the news and definitely not bringing in new investors.
My prediction is if we breakthrough the $31,000 resistance line then we could easily find ourselves between the $37,500 and $43,000 support and resistance lines by the end of the year. However, if we stay stuck at that $31,000 point we might have to wait until the Bitcoin spot ETFs are approved before we breakthrough. Be under no illusions the price action will not move drastically between the halving and the following three to six months so any significant price action between now and the end of 2025 will happen once those ETFs are approved before the halving point.
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