What happened?
Bitcoin recently broke its historical high, briefly surpassing $120,000, triggering a massive short squeeze and driving the overall cryptocurrency market upward. Market analysts are generally optimistic about its subsequent upward momentum, expecting it to challenge even higher price levels.
The upcoming 'Crypto Week' in the US will deliberate on several cryptocurrency-related bills, including stablecoin regulation and cryptocurrency classification, which is expected to establish a clear regulatory framework for the industry. This is seen as an important catalyst for Bitcoin's recent surge, attracting more investor attention.
Bitcoin breaks new highs, market sentiment optimistic
Bitcoin (BTC) has recently continued to set new historical highs, breaking the $120,000 record. This wave of price increase not only triggered a massive short squeeze but also filled the market with anticipation for its future performance. Many analysts believe that Bitcoin is likely to replicate its seven-week 'price discovery uptrend' and even challenge the range of $135,000 to $140,000.
💡 'Short Squeeze': Refers to a situation in the financial market where investors expect the price of an asset (such as Bitcoin) to decline, hence borrowing and selling that asset (known as 'shorting'). If the asset price does not fall but rises, these short-selling investors will face losses.
When prices continue to rise and reach a certain level, these short sellers, in order to avoid greater losses, are forced to buy back the assets they previously sold to close their positions. This forced buying behavior can further drive up the asset price, creating a chain reaction that leads to more short sellers being forced to close their positions, which is known as a 'short squeeze.'
Behind this wave of price increases, in addition to sustained institutional capital inflows, the upcoming 'Crypto Week' in the US is seen as a key catalyst. This legislation is expected to provide the much-needed regulatory framework for the crypto industry, further promoting mainstream adoption of crypto assets.
US 'Crypto Week': Regulatory Framework Takes Shape, Leading Market Surge
Starting July 15, Taiwan time, the US House of Representatives will debate and vote on a series of cryptocurrency bills that will establish the long-awaited regulatory framework for the digital asset industry.
This series of legislative actions is referred to by the market as 'Crypto Week,' which is generally expected to bring positive developments to the industry and attract more capital inflows.
Major bills include:
(Genius Act): Establishes federal regulatory rules for stablecoins
The bill, known as the 'GENIUS Act,' requires stablecoins to be 100% backed by liquid assets (such as US dollars or short-term US Treasury bills) and mandates issuers to publicly disclose reserve compositions monthly.
This move is primarily aimed at enhancing the legitimacy of stablecoins, making them more readily accepted by banks, retailers, and consumers for fund transfers. Currently, this bill has bipartisan support and is expected to be signed into law by President Trump after passing the House.
(Clarity Act): Establishes a more comprehensive regulatory framework for cryptocurrencies
This bill will establish a more comprehensive regulatory framework for cryptocurrencies and expand the Commodity Futures Trading Commission's (CFTC) oversight over the digital asset industry.
For a long time, whether cryptocurrencies should be classified as 'commodities' or 'securities' has been a core issue of debate between the cryptocurrency industry and regulatory agencies in various countries. This uncertainty in classification has not only created a significant legal gray area but has also caused many crypto companies to pay a heavy price, spending years embroiled in lengthy legal battles, with one of the most famous cases being the lawsuit between Ripple and the US Securities and Exchange Commission (SEC).
If this bill is passed and signed into law, it will clearly define which cryptocurrencies are classified as securities or commodities and clarify the jurisdiction of the Securities and Exchange Commission in this area.
(Anti-CBDC Surveillance State Act): Prevents the Federal Reserve from issuing Central Bank Digital Currency (CBDC)
This bill considers that government-controlled CBDCs could lead to unprecedented financial surveillance and could be used to control and monitor politically unpopular activities or individuals.
Market Outlook and Potential Risks
The strong surge in Bitcoin has also driven a general uptrend in the entire crypto market, with major tokens like Ethereum (ETH), XRP, and Solana also rising, increasing the total market capitalization of cryptocurrencies to about $3.67 trillion. Investors are actively positioning themselves, anticipating additional attention and funding from 'Crypto Week.'
Market analysts are closely monitoring several key price levels. Veteran trader Daan Crypto Trades pointed out that the liquidity areas worth noting are $115,500 to $116,500 and above $120,000. He believes that once Bitcoin stabilizes above $120,000, it will open the path toward $135,000 to $140,000; if it encounters resistance, it may retest the support at $114,000 to $115,000.
Another trader, BitBull, remains optimistic about Bitcoin's short-term outlook, stating that this surge is the strongest weekly breakout since November 2024, with a similar breakout previously leading to a 50% increase.
In addition to technical analysis, several bullish factors have injected confidence into Bitcoin, including record institutional capital inflow and the upcoming US 'Crypto Week' alongside rumors of Federal Reserve Chairman Powell's resignation.
However, some analysts have also warned about the current overheated sentiment in the market.
Dirk Willer, Head of Global Macro, Asset Allocation, and Emerging Markets Strategy at Citibank, pointed out that although the improved regulatory environment supports price increases, it may be premature to liken crypto assets to 'digital gold.'
Simon Peters, a cryptocurrency analyst at online broker eToro, also cautioned that while it is reasonable to remain optimistic about Bitcoin at present, the risks of price declines or short-term corrections still exist.
The cryptocurrency market is currently at a critical moment. With the gradual shaping of the US regulatory framework, it is expected to bring a clearer development path and wider adoption for the industry. However, investors still need to cautiously assess risks and closely monitor future policy trends and their substantive impacts on the market.
References: Cointelegraph, Reuters
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