Analysts attribute surge in Bitcoin to augmented inflow of spot ETFs, reaching $71k.
Bitcoin’s price experienced a significant surge, reaching $71,000 on Tuesday. This sudden increase in value has sparked a debate within the cryptocurrency community about whether it signifies the beginning of a bull market or the peak of Bitcoin’s growth.
As of now, the world’s largest cryptocurrency is being traded at $70,950, with a 24-hour trading volume of $52.4 billion. Its market capitalization currently stands at $1.39 trillion.
Matteo Greco, a research analyst at Fineqia International, has pointed out that the growing interest and inflows in Bitcoin spot exchange-traded funds (ETFs) have played a crucial role in driving up Bitcoin’s price. This suggests a renewed confidence in the market.
Last week, Bitcoin closed at around $66,300, reflecting a 7.8% increase from the previous week’s closing price of approximately $61,500. Greco noted that the week was characterized by low daily volatility, with the majority of the price surge occurring on Wednesday, while the rest of the week showed stable price action.
After a period of low demand lasting five weeks, resulting in cumulative net outflows of around $1 billion, the recent increase in value near $60,000 has reignited interest in Bitcoin ETFs. Farside Investors reported approximately $950 million in inflows last week, a level not seen since March.
According to Greco, last week saw not only the Grayscale Bitcoin Trust (GBTC) experiencing increased investor funds, but also other U.S. spot Bitcoin ETFs. This development follows a potential trend reversal for Grayscale’s converted GBTC fund, which saw its first weekly net inflows in 19 trading weeks. Between May 13 and May 17, GBTC received $31.6 million in net inflows. However, these movements pale in comparison to the approximately $17.6 billion in outflows since January when the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs.
With the resurgence in spot Bitcoin ETF inflows and Bitcoin’s price recovery, Greco believes that attention will now shift to spot Ethereum ETFs.
The SEC is expected to make decisions on VanEck and ARK 21Shares’ filings on May 23 and 24, respectively. Greco stated that market participants anticipate the SEC withholding approval for these products, despite approving Bitcoin ETFs in January. This aligns with predictions from Bloomberg experts.
On May 21, Ethereum experienced an 18% surge 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 expedited pace in approving the ETF could be due to political pressure, as the agency has previously shown minimal involvement with ETF applicants.
In contrast, Greco believes that the SEC might approve 19b-4 filings while delaying S-1 approvals. S-1s are registration statements that firms must submit before publicly offering securities, while 19b-4 forms are used to propose rule changes with the SEC. Both firms must receive approval from the securities watchdog before spot Ethereum ETFs can be traded on U.S. national exchanges. Greco suggests that if the SEC follows this path, it may take the opportunity to thoroughly examine the Ethereum market and determine whether or not ETH is considered a security.
In conclusion, Greco stated that this decision could be favorable for issuers, as traditional finance investors remain predominantly focused on Bitcoin, potentially reducing market activity around Ethereum Spot ETFs if they are launched in the coming week.
Read more: Analysts believe that if a spot Ethereum ETF is approved, it could lead to an increase in Ethereum’s price to $5,000.
