Analyst Predicts Market Confidence Boost as Bitcoin Reaches $71,000

Bitcoin’s price surged to $71,000 on Tuesday, driven by increased spot buying and spot BTC exchange-traded fund (ETF) purchases. This significant rise has sparked discussions within the cryptocurrency community about whether we are witnessing the start of a bull market or its peak.

At the time of writing, Bitcoin is trading at $70,950, with a substantial 24-hour trading volume of $52.4 billion. The market cap of Bitcoin currently stands at $1.39 trillion.

Matteo Greco, a research analyst at Fineqia International, pointed out that growing investor interest and inflows into Bitcoin spot ETFs are major factors behind the recent price increase. This trend suggests a renewed confidence in the market.

Bitcoin closed last week at approximately $66,300, marking a 7.8% increase from the previous week’s close of around $61,500.

“The 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,” Greco stated.

Renewed Interest in Bitcoin ETFs

After experiencing five weeks of low demand and about $1 billion in cumulative net outflows, Bitcoin’s rebound near $60,000 has reignited interest. Farside Investors reported approximately $950 million in inflows last week, a level not seen since March.

Greco noted that GBTC was not the only U.S. spot BTC ETF attracting investor funds. Grayscale’s converted GBTC fund saw its first weekly net inflows in 19 trading weeks, with $31.6 million in net inflows between May 13 and May 17.

However, these inflows are modest 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 a resurgence in spot Bitcoin ETF inflows and Bitcoin’s price recovery, attention may shift to spot Ethereum (ETH) ETFs.

Potential Outcomes for Spot Ethereum ETFs

The SEC is scheduled to make a decision 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 increased the odds of Ethereum ETF approval from 25% to 75%. Balchunas noted that political pressure might be accelerating the SEC’s pace to approve the ETF.

“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.

The Fineqia analyst believes the SEC might approve 19b-4 filings while delaying S-1 approvals. S-1s are mandatory registration statements for public offerings, whereas 19b-4 forms propose rule changes with the SEC. Both approvals are necessary for spot Ethereum ETFs to be traded on U.S. national exchanges.

Greco stated that if the SEC follows this path, it might use the opportunity to thoroughly examine the Ethereum market and decide whether or not ETH is a security.

“This decision could be favorable for issuers,” Greco concluded, noting that traditional finance investors seem to remain strongly focused on BTC, potentially reducing market activity around ETH Spot ETFs if launched next week.

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