Bitcoin staged a "flower" showdown, how will the market develop after ETFs?

In the past few months, the crypto market has truly staged a fierce long-short showdown between major crypto players and institutions. So in this duel, what is the outcome? How will Bitcoin develop after ETFs?

Written by: BitpushNews

The recently popular “Flowers” has come to an end. Mr. Dahu Bao, who was in the era of retail investors, and Mr. Qiang, who entered the market as an institution, had a fierce game. At the same time, the U.S. SEC has approved multiple Bitcoin ETFs, Wall Street financial institutions have entered the market, and Bitcoin has officially entered the institutional era. In the past few months, the crypto market has truly staged a fierce long-short showdown between major crypto players and institutions. So in this duel, what is the outcome? How will Bitcoin develop after ETFs?

Fake news emerges, Wall Street takes advantage of the trend

The impact of Bitcoin ETF on BTC first started with a piece of false news, and people began to believe it and started to speculate; while Wall Street’s big players used fake news to successfully achieve the first round of harvest. This article will briefly summarize this long-short showdown, which is even more exciting than the TV series, and would like to use this article to commemorate this historic moment.

On October 16, 2023, Cointelegraph, the authoritative media in the encryption industry, announced on the X platform that the SEC approved BlackRock’s iShares Bitcoin Spot ETF. Subsequently, Cointelegraph’s information was forwarded by many media as a source. As the news spread, the price of BTC rose sharply, once exceeding 10%. But then, Bloomberg ETF analyst James Seyffart posted on the thing. Later, Cointelegraph officials later confirmed that it was fake news. However, Bitcoin did not go back and forth, but continued to rise due to “fake news”. Many large investors who were chasing the rise began to short-sell after knowing that the news was false. However, Bitcoin continued to rise against the trend, directly confusing the short-sellers. During this period, MicroStrategy continued to purchase Bitcoin. As the price of Bitcoin exceeded 47,000 USDT in the short term, MicroStrategy’s Bitcoin position had a floating profit of US$3 billion. MicroStrategy currently holds a total of 189,150 Bitcoins, with an average purchase price of $31,168.

Encryption agencies insist on “political correctness”, and hackers can’t wait to “take over”

On the eve of the approval of the Bitcoin ETF, the U.S. judge’s relevant ruling on the Bitcoin ETF application is the most important support for the bulls’ belief; in addition, Bloomberg analysts continue to state that the Bitcoin ETF is about to be approved, which has become the main contributor to the bulls’ belief; Frequent meetings between the US SEC and Bitcoin ETF applicants seem to confirm this fact from the side. However, when everything seemed to be going smoothly, the politically correct arguments of the big crypto players caused a wave of counterattacks by the short sellers in the market; at the same time, hackers released real news for the SEC, creating an unprecedented divergence between the long and short market.

According to “Bitui”, in August 2023, court documents showed that a three-judge appeals panel in Washington overturned the U.S. Securities and Exchange Commission’s (SEC) decision to block the Grayscale ETF. In the Ripple case, on October 3, Judge Torres dismissed the SEC’s appeal request; on October 19, Grayscale posted on the X platform that it had submitted Form S-3 as part of its efforts to convert GBTC into an ETF. Since then, Bloomberg Analysis has continued to claim on social media that Bitcoin will be approved on January 11, 2024.

When big events happen, some interesting stories often appear in TV dramas, but they are even more exciting in reality. What you think is a logical process turns out to have twists and turns at the last moment. On January 3, the encryption agency Matrixport released a research report, which concluded that all current spot Bitcoin ETF applications failed to meet a key requirement, so the SEC is expected to reject all proposals in January. If the SEC refuses to approve the ETF, there will be a massive liquidation in the market, with most of the $5.1 billion long positions expected to be liquidated, and the price of Bitcoin could quickly fall by 20% and fall back to the $36,000/$38,000 range. The analyst also believed earlier that the Bitcoin ETF could pass, and the reason supporting his argument for change was that “SEC Chairman Gary Gensler is still sitting on it and does not think he will suddenly switch to embracing Bitcoin for political reasons.”

According to a research report, Bitcoin plummeted after hearing the news, and this “heavy pot” was blamed. Wu Jihan, the head of Matrixport, posted on the view. Our analyst has indeed adjusted his view. In this ever-changing market, he can calmly adjust his view in a state of “turning over his face faster than turning over a book”. This is It should be viewed as an ability and an advantage."

On January 10, it seemed that the hackers could no longer wait. Through the attack, they released a Twitter copy that might have been prepared by the SEC in advance. The market suddenly aroused many speculations. Finally, on January 12, the Bitcoin ETF passed.

Bitcoin halving is the “real meal”, Layer 2 will lead to an explosion of blockchain applications

How will the crypto industry develop in the future after the passage of the Bitcoin ETF? This article believes that Bitcoin ETF is just the “appetizer”, and halving is the “main meal”, and Layer 2 will become the main direction of technological development. With technological advancement, blockchain applications are expected to explode out of the circle.

According to BiTui, information revealed from the Ethereum core developers meeting showed that the activation time of Dencun upgrade on the Goerli test network will be determined as January 17. In addition, the developers also initially agreed to set January 30 and February. The 7th is set as the date for the upgrade of the Sepolia test network and the Holesky test network respectively. Dencun upgrade is the most direct for the development of Layer 2 and will significantly reduce Layer 2 costs. This article has introduced the development prospects of Layer 2 in detail in the previous article “2024 Crypto Industry Outlook: Three Major Narratives of Layer 2 Unfolded”, in which we can focus on three aspects: Layer 2 decentralized sorter is expected to give birth to a new crypto financial track; Parallel EVM is expected to further unleash the potential of Layer 2 and break the island effect of public chains; the Zk system will gradually come online, bringing new changes.

Optimism launched OP Stack. Since June 2023, it has announced more than a dozen projects to build L2 networks based on OP Stack, including star projects such as Base, opBNB, Zora, Worldcoin, and DeBank, which are developing rapidly. Arbitrum is also developing rapidly. Steven Goldfeder, co-founder of Offchain Labs, the developer behind Arbitrum, said that there are currently more than 50 Arbitrum Orbit chains under development, and it is predicted that there will be 150 Orbit chains on the mainnet in 2024. According to L2B eat data, there are 26 ZK-Rollup solutions among 65 Rollup projects, while year-on-year, there are only 21 OP-Rollup. In the ZK-Rollup solution, Scroll, Taiko, etc. pursue the ultimate EVM equivalence, aiming to improve compatibility with the Ethereum main network; zkSync and Starknet pursue the comprehensive expansion capabilities of the chain, trying to improve transaction processing speed and throughput. The main network increases incremental users; Aztec focuses on solving transaction privacy issues through ZK. With the Cancun upgrade of Ethereum, the Zk series has also continued to make efforts recently, and a new round of wealth creation stories of the Zk series will most likely be staged in a new round of bull market.

At the same time, this article believes that with the development of Ethereum Layer 2, there is a high probability that Bitcoin’s second layer will also explode. The main reason behind the explosion of Inscription in 2023 is the Taproot upgrade. Entering 2024, Bitcoin will also usher in a series of important upgrades, such as supporting the expression smart contract BitVM on Bitcoin, launching the Taproot Assets mainnet, OP_CAT proposal, OP_TXHASH draft proposal, Lightning Timeout Trees, updated Musig 2 proposal, BIP-324 – V2 transport, and more. At the same time, Ethereum Layer 2 technology may be migrated to Bitcoin to a certain extent. Along with the traditional financial market of Bitcoin finance, more and more users will be exposed to Bitcoin. Corresponding to the huge positive expectations, Millennials are embracing the crypto world while inheriting wealth. According to Galaxy research reports: Millennials are about to usher in the largest wealth inheritance in history.

From a small service to the US financial market, BTC welcomes a new journey

At around 6:15 pm GMT on January 3, 2009, the Bitcoin genesis block was generated in a small server in Helsinki, the Netherlands. Satoshi Nakamoto left a sentence on the block, "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks (The Times’ front page headline that day: Chancellor on brink of second bailout for banks)

Today, U.S. debt is rising at a faster rate, and the U.S. government has no choice but to continuously raise the debt ceiling. As a digital currency with a limited quantity that cannot be tampered with, Bitcoin has officially entered the U.S. financial market from a small server. There is no doubt that January 11, 2024 is a historic moment, and it is also a new beginning.