Bitcoin hits a new all-time high. How will the cryptocurrency market perform in the future?

*Source: 21st Century Business Herald reporter Lai Zhentao

As the market rekindles its enthusiasm for risky assets, Bitcoin has once again hit a record high.

On Friday afternoon, the price of Bitcoin soared all the way, breaking through $118,000 per coin, setting a new record high again. It once hit a high of $118,661 before falling slightly. Within a day, the price of Bitcoin rose by more than $2,600.

Last week, the Trump administration signed and passed the "Big and Beautiful Act", which has the tendency to reduce taxes and increase spending, which once again boosted the market's buying sentiment for risky assets. Some people compare the recent US stock market to "breaking into KTV from the ICU", and Bitcoin has repeatedly broken through historical highs in this wave of market conditions.

In the long term, the market's bullish enthusiasm remains high. Many investors expect that the continued buying of listed companies and the purchase of Bitcoin as a reserve asset, as well as the accelerated passage of cryptocurrency legislation by the U.S. Congress, will help Bitcoin continue to hit new highs in the second half of the year.

Next week, the cryptocurrency circle will also usher in a "critical moment" - the U.S. House of Representatives is about to review three major cryptocurrency bills, and some believe that the global cryptocurrency regulatory landscape may be reshaped as a result. How will the new bill rewrite the regulatory rules? As the regulation of stablecoins gradually takes shape, will this be a nightmare or a blessing for Bitcoin?

A new round of rising market begins?

Since the beginning of this year, Trump, who calls himself the "crypto president," has taken office, fueling the upward trend of Bitcoin. Since the beginning of the year, the price of Bitcoin has risen by more than 26%.

Some time ago, Bitcoin's performance was relatively flat, but the turning point appeared this week. Bitcoin was like a rocket and restarted its soaring journey. On Monday this week, Bitcoin was still fluctuating above $100,000. Within five days, the value of Bitcoin rose by $8,800 (about 63,000 RMB), an increase of more than 8%.

According to Coinglass data, as of 18:00 Beijing time on July 11, more than 270,000 people in the world were liquidated, with a total liquidation amount of US$1.28 billion.

The most direct driving force for the rise came from large institutional purchases. Joshua Chu, co-chairman of the Hong Kong Web3 Association, said that Bitcoin's historical high was driven by crazy institutional buyers. Listed companies and large institutions were rushing to buy Bitcoin, almost exhausting the liquidity of the exchange.

Jeffrey Ding, chief analyst of HashKey Group, a licensed virtual asset exchange in Hong Kong, told the 21st Century Business Herald reporter that this round of Bitcoin's rise was driven by multiple factors. First, after sufficient consolidation, the market has accumulated strong upward momentum, and breaking through the key resistance level has become a high-probability event. Secondly, there is sufficient buying power, long-term holders dominate the market, the degree of chip lock-up is high, and the market selling pressure is small, providing a solid support basis for prices.

In addition, the policy support is indispensable. Ding Zhaofei further mentioned that the expected implementation of various countries' recent digital currency-related policies has further boosted market confidence and attracted more capital inflows. At the same time, the passage of the Great Beauty Act has further stimulated global investors' enthusiasm for risky assets. Bitcoin, as a representative asset of high risk and high return, has been hotly pursued by capital.

Recently, Trump's family business has also increased its bets on Bitcoin. On Tuesday, Trump Media Technology Group (DJT) submitted an application to the U.S. Securities and Exchange Commission, planning to launch a third exchange-traded fund to invest in cryptocurrencies such as Bitcoin and Ethereum.

Coinglass data shows that the call option holdings of Bitcoin are much higher than put options, indicating that the market is generally optimistic about the trend of Bitcoin.

Many analysts believe that the funds that have recently flowed into Bitcoin are long-term demand rather than speculative hot money. Adam Guren, founder and chief information officer of asset management company Hunting Hill Global Capital, said that as the Federal Reserve is about to restart interest rate cuts and global political instability is rising, investors are competing for "hard assets" and Bitcoin will also benefit from the positioning of "digital gold." The difference in this cycle is that demand is structural, regular and sticky.

Geoff Kendrick, head of foreign exchange and digital asset research at Standard Chartered Bank, a well-known "bull" of Bitcoin, also maintains an optimistic judgment, predicting that Bitcoin will rise to $135,000 in the third quarter and $200,000 per coin by the end of the year.

However, Ding Zhaofei also reminded that although the market outlook is still mainly bullish, after the current price breakthrough, market sentiment is high, and historical highs usually do not form a top immediately. The top construction requires a long period of adjustment and confirmation, and investors are advised to remain patient.

Black swan events at the macro level are also potential risks. Ding Zhaofei pointed out that geopolitical crises (such as escalation of the situation between Iran and Israel), financial crises (such as runaway inflation or debt defaults), major political events (such as unexpected turmoil in the US political arena) or macroeconomic crises may have an impact on market sentiment and price trends. Investors should pay close attention to market dynamics and be wary of short-term correction risks.

"Cryptocurrency Week" is coming

After taking office, Trump did fulfill his election promise to make the United States the "world's crypto capital", including signing an executive order to establish a strategic Bitcoin reserve, accelerating the promotion of stablecoin legislation, and weakening the Securities and Exchange Commission (SEC)'s regulatory power over cryptocurrencies.

However, every time a bill is reviewed by Congress, the People's Party, which holds a strong regulatory stance, may become the "stumbling block" on the road to crypto deregulation.

Now, the cryptocurrency circle is focusing on the crypto legislation sprint next week. According to reports, the U.S. House of Representatives announced that the week of July 14 will be designated as "Cryptocurrency Week", when the CLARITY Act, the Anti-CBDC Surveillance State Act, and the Guidance and Establishment of a U.S. Stablecoin National Innovation Act (hereinafter referred to as the Genius Act) will be reviewed.

In the original policy agenda of the Trump administration, he only hopes to promote the rapid review of the Genius Act, but the House of Representatives hopes to bundle the Genius Act and the Clarity Act to include stablecoins in the broader crypto industry supervision and carry out more comprehensive market institutional reforms. Therefore, whether the three major bills can be successfully reviewed in the House of Representatives next week and in what form they will be reviewed are still uncertain.

But the market is still optimistic, believing that the inclusion of cryptocurrencies in the mainstream regulatory framework is itself a big benefit to Bitcoin.

Liu Honglin, founder of Shanghai Mankiw Law Firm, which provides Web3.0 legal services, told the 21st Century Business Herald reporter that the centralized scheduling of these bills for review actually means that the differences, attitudes and directions of the US legislative level towards the encryption industry are gradually becoming explicit and institutionalized. For Bitcoin, it will not be directly included in the regulatory objects of these bills, but the benefit it gains from them is the reaffirmation of its status: as a crypto asset that does not rely on national credit and is not controlled by a single institution, it is regarded as "digital gold" to combat the abuse of power. In particular, the advancement of the "Anti-CBDC Surveillance State Act" has strengthened the public's understanding of "decentralized currency" and made it easier to include Bitcoin in the imaginary path of "personal sovereignty tools." From this perspective, Bitcoin will gain an unexpected consensus support in the gap between policy and ideology.

"If these bills are passed, they may significantly reduce policy uncertainty, attract more institutional funds to enter the market, and further boost the prices of Bitcoin and Ethereum. As the regulatory framework becomes clearer, the mainstreaming process of the crypto market is expected to accelerate, and market sentiment will remain high in the short term." Ding Zhaofei analyzed.

With the rise of stablecoins, is Bitcoin hanging or stable?

With the advancement of stablecoin legislation, the crypto industry seems to be entering a carnival mode. The mainstream view is that stablecoins provide a channel for more funds to "go on the chain", and the value of Bitcoin will continue to rise. But another voice is also ringing-when sovereign currencies actively seize the battlefield of encryption, decentralized Bitcoins will also fall into an existential crisis. Is it possible for stablecoins to become the "gravedigger" of Bitcoin?

Wang Yingbo, a digital economist at the Shanghai Academy of Social Sciences, analyzed to the 21st Century Business Herald reporter that the United States's accelerated legislation on stable regulation means that the US government has clearly seen the general trend of currency digitization and realized that currency digitization is an important measure to further consolidate the hegemony of the US dollar, but digitization must be the full digitization of the US dollar, which is the core background for the passage of the genius bill and the listing of stablecoin issuer Circle. The USDC launched by Circle must have a core reserve of 100% US dollar assets, including US dollar cash and short-term treasury bonds, and cryptocurrencies such as Bitcoin are explicitly excluded.

In Wang Yingbo's view, in the long run, the launch and large-scale popularization of USDC and stablecoins based on sovereign currencies of various countries are only a matter of time. As cryptocurrencies are excluded from reserve assets, the speculative momentum supporting the rise of Bitcoin will continue to disappear, and it is highly likely that Bitcoin will be marginalized in the end. Bitcoin has always been a non-interest-bearing speculative asset, and its valuation is highly dependent on market confidence. Once confidence collapses, the collapse of prices is foreseeable due to the lack of stable cash flow as support. Once it rises and falls for a long time in the short term, it may trigger a large-scale sell-off. In the long run, asset prices are still based on cash flow discounts, and non-interest-bearing assets have no investment value, including gold and Bitcoin.

However, those who hold a bullish view firmly believe that the rise of stablecoins actually provides a huge traffic entrance for Bitcoin.

Liu Honglin admitted that at the level of "transaction function", stablecoins are definitely squeezing Bitcoin. But from the perspective of "asset allocation", the outbreak of stablecoins is paving the way for Bitcoin. Many people enter the world of crypto assets for the first time by purchasing stablecoins to bypass the local banking system. After they have a basic understanding of on-chain assets, the next step will naturally be to think about asset preservation, inflation resistance, risk aversion and other issues, which stablecoins cannot solve, but Bitcoin provides solutions. Therefore, from the perspective of "entry", stablecoins are more like a liquidity distributor. They do not compete with Bitcoin, but help it to drain.

In Ding Zhaofei's view, the global trend of stablecoin compliance will not only attract more "quasi-dollar" funds to flow in, but will also further strengthen the risk aversion and value storage properties of core assets such as Bitcoin, once again proving the uniqueness of Bitcoin as "digital gold". At the same time, the promotion of compliance will open the door to crypto assets for the traditional capital market. Long-term capital such as pension funds and mutual funds can enter the market through mature compliance channels.

In addition, the decentralized nature of Bitcoin may become its unique competitive advantage that distinguishes it from stablecoins.

Liu Honglin added that if stablecoins are subject to strict regulation in the future, requiring real-name registration, transparent reserves, or even prohibiting anonymous transactions on the chain, then Bitcoin, a "native decentralized asset," will become an irreplaceable choice.

In short, when choosing asset allocation, users will be clearer - whether to choose a compliant stablecoin that is anchored to national credit and has low volatility, or a digital stored value that is censorship-resistant, depreciation-resistant, and circulated globally.