Author | Heimi, Bai Ze Research Institute

At the time of writing, Bitcoin has risen more than 6% in the past 24 hours, briefly touching $29,000. At the same time, Bitcoin has regained 50% of the entire cryptocurrency market share. It should be noted that Bitcoin's market dominance has not exceeded 50% since May 2021.

I believe that this round of Bitcoin's rise and rising dominance can be mainly attributed to three aspects: the entry of financial giants into crypto trading, the resurgence of competition in Bitcoin spot ETFs, and the upcoming fourth Bitcoin halving.

Financial giants enter crypto trading amid regulatory crackdown

EDX Markets is an institutional-only exchange backed by three of the largest asset managers in the United States, Charles Schwab, Fidelity Digital Assets, and Citadel Securities. It was announced in September 2022 and officially launched yesterday, sparking heated discussions in the crypto community.

In terms of core leadership, Jamil Nazarali, former global head of business development at Citadel Securities, will serve as CEO of EDX Markets, while Tony Acuña-Rohter, former chief technology officer of ErisX, and David Forman, former general counsel of Fidelity Digital Assets, will serve as CTO and general counsel, respectively.

As an upstart exchange with strong backing, EDX takes a cautious approach to regulation by the U.S. Securities and Exchange Commission (SEC), focusing on security and compliance.

On the one hand, the biggest difference between EDX and other exchanges is that it is a "non-custodial" exchange, which means that it does not directly hold customers' crypto assets and ensures the safety of customers' funds through trusted intermediaries.

On the other hand, recently, two major cryptocurrency exchanges, Coinbase and Binance, were sued by the US SEC.

In the Binance 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 another seven tokens as securities, including CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO.

None of the aforementioned tokens are available for trading on EDX, and customers can only trade four cryptocurrencies: BTC, ETH, LTC, and BCH — none of which the SEC says are securities.

As a result, EDX is refocusing institutional interest on established cryptocurrencies, including Bitcoin.

While some Twitter users viewed the timing of the SEC’s recent lawsuit against Binance and Coinbase as concerning, many viewed the launch of EDX as positive news for the price of Bitcoin.

In addition, some industry insiders speculate that it is no coincidence that these financial giants launched exchanges after the SEC's enforcement actions. Suddenly, "these big Wall Street companies entered the crypto market after the runway was cleared." Regulators first hit native cryptocurrency exchanges through lawsuits to create fear, and then let financial giants pounce in. Perhaps regulators prefer to let established companies enter the crypto market rather than supporting native companies in the crypto market from the beginning.

Competition for Bitcoin Spot ETFs Re-emerges

Despite the U.S. SEC's crackdown on the crypto industry, traditional financial giants and institutional investors still show interest in Bitcoin and are accelerating their entry.

Recently, BlackRock, the world's largest asset management company, applied for a Bitcoin spot ETF. If approved, it will open up a regulated investment channel for a wider range of investors without actually purchasing Bitcoin, and ultimately lead to an increase in Bitcoin demand and value.

Markus Thielen, head of cryptocurrency research at digital asset service platform Matrixport, believes: "The U.S. SEC is likely to approve BlackRock's Bitcoin ETF. ... The ETF may be approved in September/October 2023 and will attract $10 billion within three months and $20 billion within six months - which will greatly support Bitcoin prices."

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

WisdomTree followed closely behind. Less than a week after BlackRock submitted its application, the $87 billion asset management company again submitted an application for a Bitcoin spot ETF. WisdomTree stated in the filing: "The Bitcoin market is mature and its operating efficiency and scale are similar in material respects to mature equity, fixed income, and commodity markets."

This is not WisdomTree’s first application. As early as December 2021, the US SEC rejected it due to the lack of a "regulatory sharing agreement" and market manipulation concerns.

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

Recently, there have been rumors that the third largest asset management company Fidelity is planning to create an "earthquake" in the crypto market, apply for its spot Bitcoin ETF, and may launch an acquisition of the troubled Grayscale. However, Fidelity has not confirmed the rumor, and it remains to be seen whether the company will really enter the crypto market in a big way.

However, BlackRock's actions may indeed attract traditional financial giants to imitate, 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 exploded in the following years.

The upcoming Bitcoin halving

The upcoming fourth Bitcoin halving will occur in 10 months (May 9, 2024), and the block reward will be reduced to only 3.125 Bitcoins. Bitcoin halving is an important narrative for Bitcoin and a catalyst for the growth of the last three bull markets. It reduces the block reward issued to miners by half every four years. After each halving, the number of Bitcoins mined at the same energy cost will decrease, so this often causes strong speculation and expectations about the price of Bitcoin in the Bitcoin community.

Historically, this narrative has always sparked new all-time highs for Bitcoin and the broader crypto market.

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

It can be seen that all lines reach their maximum price between the 400th and 600th days.

Plan B, the most popular Bitcoin analyst, believes that through the fourth halving, the price of Bitcoin is expected to rise to more than $32,000 and start a new bull market cycle in 2025.

Finally, DYOR, dig deeper into any incident.

risk warning:

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