Analyst expects renewed market confidence as Bitcoin surges to $71,000
Bitcoinโs price surged to $71,000 on Tuesday amid increased spot buying and spot BTC exchange-traded fund (ETF) purchases, prompting the cryptocurrency community to debate whether this signals the start of a bull market or its peak.
At the time ofย writing, the worldโs largest cryptocurrency exchanged hands at $70,950, with a massive 24-hour trading volume of $52.4 billion. The crypto assetโs market cap currently stands at $1.39 trillion.
Matteo Greco, research analyst at Fineqia International, has highlighted the increasing investor interest and inflows in Bitcoin spot ETFs as aย keyย driver of Bitcoinโs recent price surge, suggesting a renewed confidence in the market.
Bitcoin closed last week at approximately $66,300, reflecting a 7.8% climb from the prior weekโs close of around $61,500.
โThe week was characterized by low daily volatility, with most of the price increase occurring on Wednesday, while the rest of the week exhibited stable price action,โ Greco said in a statement to crypto.news.
Renewed interest in Bitcoin ETFs
After five weeks of low demand, resulting in about $1 billion in cumulative net outflows, the recent rebound near $60,000 has reignited interest, withย Farside Investorsย reportingย about $950 million in inflows last week, a level not seen since March.
According toย Greco,ย GBTC was not the only U.S. spot BTC ETF that drew investor funds last week.ย The development follows a possible trend reversal for Grayscaleโs converted GBTC fund, which experienced its first weekly net inflows in 19 trading weeksย lastย week. The analyst said GBTC received $31.6 million in net inflows between May 13 and May 17.ย
However, last weekโs GBTC movements paledย in comparisonย to the approximately $17.6 billion in outflows since January, when the U.S. Securities and Exchange (SEC) approved spot Bitcoin (BTC) ETFs.ย
With a resurgence in spot Bitcoin ETF inflows and Bitcoinโs price recovery, the Fineqia International analyst believes attention willย nowย shift to spot Ethereum (ETH) ETFs.ย
Potential outcomes for spot Ethereum ETFs
The SECย is set to make a decisionย on VanEck and ARK 21Sharesโ filings on May 23 and 24, respectively.ย
โMarket participants expect the SEC to withhold approval for these products, despite approving BTC ETFs in January,โ 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 U.S. SECโs accelerated pace to approve the ETF could be due to political pressure, noting that the agency had previously shown minimal involvement with ETF applicants.
โConcerns over the liquidity of ETHโs 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.โ
Matteo Greco, research analyst at Fineqia International
In contrast, the Fineqia analyst believes the Securities regulator might approve 19b-4 filings while delaying S-1 approvals. S-1s are registration statements that are mandatory for firmsย prior toย the public offering of securities, whereas 19b-4 formsย are usedย to propose rule changes with the SEC.ย
The securities watchdog must approve both firms before spot Ethereum ETFs canย be tradedย on U.S. national exchanges.ย Greco stated that if the SEC follows this path, itย might use the opportunity toย thoroughly examine the Ethereum market and possibly decide whether or not ETH is a security.
The analyst concluded, โThis decision could be favourable for issuers,โ as traditional finance investors seem to remainย stronglyย focused on BTC, potentially reducing market activity around ETH Spot ETFs โif launched next week.โ
