Bitcoin’s price surged to $71,000 on Tuesday, driven by increased spot buying and a rise in spot BTC exchange-traded fund (ETF) purchases. This surge has sparked a debate within the cryptocurrency community about whether this marks the beginning of a new bull market or its peak.
At the time of writing, Bitcoin was trading at $70,950, with a 24-hour trading volume of $52.4 billion. The market cap of the leading cryptocurrency now stands at $1.39 trillion.
Matteo Greco, a research analyst at Fineqia International, pointed to growing investor interest and significant inflows into Bitcoin spot ETFs as key factors behind the recent price hike, suggesting a renewed confidence in the market.
Bitcoin ended last week at around $66,300, reflecting a 7.8% increase from the previous week’s close of about $61,500.
“The week was marked by low daily volatility, with most of the price increase occurring on Wednesday, while the rest of the week showed stable price action,” Greco noted.
Renewed Interest in Bitcoin ETFs
After five weeks of low demand, resulting in approximately $1 billion in cumulative net outflows, the recent rebound to near $60,000 has rekindled interest, with Farside Investors reporting about $950 million in inflows last week, a level not seen since March.
According to Greco, GBTC was not the only U.S. spot BTC ETF attracting investor funds. Grayscale’s converted GBTC fund experienced its first weekly net inflows in 19 trading weeks, receiving $31.6 million in net inflows between May 13 and May 17.
However, last week’s inflows into GBTC were modest compared to the roughly $17.6 billion in outflows since January, when the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin (BTC) ETFs.
With the resurgence in spot Bitcoin ETF inflows and Bitcoin’s price recovery, Greco believes attention will now shift to spot Ethereum (ETH) ETFs.
Potential Outcomes for Spot Ethereum ETFs
The SEC is set to decide on VanEck and ARK 21Shares’ filings on May 23 and 24, respectively.
“Market participants expect the SEC to withhold approval for these products, despite approving BTC ETFs in January,” Greco stated, echoing predictions from Bloomberg experts.
On May 21, Ethereum surged 18% following an announcement by Eric Balchunas, a senior analyst at Bloomberg, who raised the odds of Ethereum exchange-traded fund approval from 25% to 75%.
Balchunas noted that the SEC’s accelerated pace in approving the ETF could be due to political pressure, as the agency had previously shown minimal involvement with ETF applicants.
“Concerns over the liquidity of ETH’s spot and futures markets, along with its previous classification as a security by the SEC, contribute to skepticism about swift approval. If rejected, issuers would need to resubmit filings, potentially leading to approval in Q4 2024 or Q1 2025 at best,” Greco explained.
Greco also suggested that the SEC might approve 19b-4 filings while delaying S-1 approvals. S-1s are mandatory registration statements for firms before a public offering of securities, whereas 19b-4 forms are used to propose rule changes with the SEC.
The securities watchdog must approve both forms before spot Ethereum ETFs can be traded on U.S. national exchanges. If the SEC follows this path, it might use the opportunity to thoroughly examine the Ethereum market and potentially decide whether or not ETH is a security.
Summary Review: This decision could be favorable for issuers, as traditional finance investors appear to remain strongly focused on Bitcoin, potentially reducing market activity around ETH spot ETFs if they are launched next week. The ongoing developments in the regulatory landscape for digital assets are likely to have significant implications for the future of cryptocurrency investments.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
