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 significant price movement has sparked discussions 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 cryptocurrency’s market cap has now reached $1.39 trillion.
Matteo Greco, a research analyst at Fineqia International, attributed the price surge to growing investor interest in Bitcoin spot ETFs, suggesting a renewed confidence in the market.
Bitcoin had ended the previous week at approximately $66,300, marking a 7.8% increase from the prior week’s close of around $61,500.
According to Greco, the price increase was primarily driven by low daily volatility, with most of the gains occurring on Wednesday.
After five weeks of low demand, which resulted in around $1 billion in cumulative net outflows, interest in Bitcoin spot ETFs has revived.
Last week, Farside Investors reported about $950 million in inflows, a level not seen since March.
Greco noted that the Grayscale Bitcoin Trust (GBTC) was not the only U.S. spot BTC ETF drawing investor funds. GBTC saw its first weekly net inflows in 19 weeks, with $31.6 million in net inflows between May 13 and May 17.
However, this is minor compared 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, attention may now shift to spot Ethereum (ETH) ETFs.
The SEC is set to decide on filings by VanEck and ARK 21Shares on May 23 and 24, respectively.
Despite market expectations, experts, including Greco, believe the SEC might withhold approval for these products for now.
On May 21, Ethereum saw an 18% price surge following Bloomberg analyst Eric Balchunas’ announcement that he had increased the odds of Ethereum ETF approval from 25% to 75%.
Balchunas suggested that political pressure might be accelerating the SEC’s approval process.
Despite this optimism, concerns over the liquidity of ETH’s spot and futures markets and its previous classification as a security by the SEC contribute to scepticism about swift approval. If rejected, issuers may need to resubmit filings, potentially delaying approval to late 2024 or early 2025.
Greco speculated that the SEC might approve the 19b-4 filings, which propose rule changes while delaying the S-1 approvals required for public offerings of securities. This approach would allow the SEC to thoroughly examine the Ethereum market and decide whether ETH should be classified as a security.
