A recent analysis by Nansen sheds light on the factors behind the latest rally in the cryptocurrency market, which saw nearly $300 million in short positions liquidated and significant price recoveries across the board.
On May 21, the overall cryptocurrency market cap surged by hundreds of billions of dollars within hours. This rapid rise followed a spike in Bitcoin (BTC) demand, as 11 U.S. spot BTC ETFs experienced over $950 million in outflows.
A key factor driving this recovery was the unexpected approval of spot Ethereum (ETH) ETFs, which significantly boosted market sentiment. “The ETH ETF approval caught the market by surprise and had a positive impact,” explained a Nansen analyst.
Several issuers have updated their 19b-4 filings, proposing rule changes, and there are reports that the U.S. SEC has been engaging with providers on securities registration statements via S-1 forms following initial approvals. Despite these advancements, the process is expected to unfold gradually.
In addition to on-chain performance and increased Wall Street crypto adoption, improved macroeconomic conditions also played a role. Short-term U.S. interest rates declined by 40 basis points over 30 days as the Federal Reserve took steps to curb inflation.
Nansen’s risk management indicators switched to a “risk-on” mode between May 18 and May 19, signaling an upward trend in token levels. “It appears we are currently experiencing an upward momentum in crypto prices,” noted the analyst.
As of the latest update, market prices have stabilized after a two-day surge that pushed BTC above $70,000 and ETH over $3,700. The total crypto market cap is around $2.7 trillion, with trading volumes halved compared to the previous day, according to CoinGecko.
Summary Review: The recent surge in the cryptocurrency market, highlighted by Nansen’s analysis, demonstrates the significant impact of regulatory developments and macroeconomic shifts. The unexpected approval of spot Ethereum ETFs, coupled with declining short-term U.S. interest rates, has fueled market optimism and led to substantial price recoveries. This positive momentum underscores the dynamic nature of the crypto landscape, where regulatory actions and economic conditions play pivotal roles in shaping market trends. As the market stabilizes, with Bitcoin and Ethereum reaching new heights, the overall crypto market cap remains robust at $2.7 trillion, signaling a potentially sustained period of growth and investor confidence.
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.
