The correct view is that Babylon represents the city where Christ was crucified...or apostate Israel and the law, versus the New Jerusalem representing the church
"Revelation is a tale of two cities. The subject of Revelation is the same as that of Galatians 4:21-31—two women/cities representing two wives. In Galatians we are explicitly told that these “things are symbolic, for these are the two covenants” (Gal. 4:24). It is exactly the same in Revelation. The New Jerusalem bride is a betrothed wife (Rev. 19:7); harlot Babylon is a widowed wife (Rev. 18:7). The unfaithful widowed wife (who became a widow when she had Jesus killed) is destroyed and then the betrothed bride becomes married (Rev. 19:1-11).3
The destruction of Jerusalem not only caused an economic crisis, it also had major religious implications. With the demolition of the Temple, major aspects of the Law of Moses, including animal sacrifice, could no longer be practiced. God seemed to have rejected the old covenant system and its people.
1After this I saw another angel coming down from heaven. He had great authority, and the earth was illuminated by his splendor. 2With a mighty voice he shouted: “Fallen! Fallen is Babylon the Great!4 She has become a home for demons and a haunt for every evil spirit, a haunt for every unclean and detestable bird. 3For all the nations have drunk the maddening wine of her adulteries. The kings of the earth committed adultery with her, and the merchants of the earth grew rich from her excessive luxuries.”