Crypto Market Continues Higher Ahead of Ethereum ETF Decision
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| By Marija Matic |
The cryptocurrency market is continuing to make steady gains today following a strong bullish run.
Bitcoin (BTC, “A-”) hovers around $68,000 at the time of writing after decisively breaking through key resistance levels and surging 7.79% last week.
But it’s not just Bitcoin itself bringing in good news. Institutions are also feeling much more optimistic as digital asset investment products saw inflows for the second week totaling $932 million thanks to the latest inflation data.
Even Grayscale, which has suffered outflows of $16.6 billion since the January ETF launch, saw minor inflows for the first time.
Traders will be closely watching to see if BTC can gather momentum for another upward push, placing it within reach of targets above $70,000.
Ethereum (ETH, “A-”) mirrored the broad market sentiment, climbing 4.84% last week and currently trading near $3,100.
However, lingering concerns regarding whether the Securities and Exchange Commission will approve a spot-based Ethereum ETF dampened institutional sentiment, leading to further outflows of $23 million from ETH-focused digital asset investment products last week.
This suggests institutional interest in Ethereum remains cautious despite the recent price increase, as their eyes are firmly set on the upcoming ETF decision. Expectations for approval in this round, however, are low.
But, even if there’s a denial, there are some slightly more positive possibilities, as ETF expert Nate Geraci notes:
Let’s unpack this speculation.
For the ETFs to be legally sold to the public, the SEC must approve both registration forms: the 19b-4s, which would allow the ETFs to be listed on exchanges, and the S-1s, which registers the firm behind the ETF with the SEC.
Technically, the 19b-4s could be approved alone, but without the approval of the S-1s, the ETFs cannot be legally sold to investors.
A “slow play” would mean the SEC would approve the 19b-4 forms, which would allow ETH ETFs to be listed, but then take its time to review and approve the S-1 forms.
The reported lack of engagement could indicate that the SEC might be taking a more cautious approach, possibly due to the complexities and risks associated with cryptocurrency products.
This “slow play” approach could let the SEC further evaluate the market conditions or the specific structures of these ETFs without outright denying the applications.
The price of ETH has been reflecting anticipation of ETF application denials, continuing a downtrend since mid-March. However, a breakout is possible if news this week exceeds expectations, even in a minor way:
Bitcoin Dominates May
BTC’s performance last week further solidified its dominance, which has been steadily rising throughout May.
Since the beginning of the month, BTC's dominance has climbed from 53.92% to its current level of 55.98%. This indicates that Bitcoin's market cap has grown at a faster pace than the combined market cap of all altcoins during this period.
Altcoin performance has been mixed, particularly over the past week. Some have dipped, while others like Chainlink (LINK, “B+”) and Solana (SOL, “B”) have rallied, surging 22.13% and 18.48% respectively in the past seven days.
Notably, Solana continues to attract strong institutional interest, seeing inflows of $4.9 million last week and $11.1 million month-to-date.
Both LINK and SOL maintain their bullish momentum today, contrasting the sideways movement of most other altcoins.
One notable exception is dogwifhat (WIF, “E+”), a memecoin on the Solana network thatstands out as the top gainer within the top 100. It is currently boasting a 8% daily increase.
Notable News, Notes & Xeets
- Global venture capital investment in crypto companies rose to $2.4 billion in the first three months of 2024, data showed on Monday, in a tentative sign that investor interest is returning.
- President Biden blocks a Chinese-backed crypto mining firm from land ownership near the Wyoming missile base, calling its proximity to the base a “national security risk.”
- Trump has shown a positive stance towards crypto while commenting, “I’m good with it,” when asked about it a few days ago.
- Gemini Earn will begin returning customers' crypto by end of month as court approves Genesis bankruptcy.
What’s Next
May has been a strong month so far for the cryptocurrency market, with the total market capitalization of all cryptocurrencies surging by 11.35% from $2.29 trillion to $2.55 trillion.
However, as the highly anticipated announcements regarding ETH spot ETFs approach, three key questions dominate the conversation:
- Will the SEC grant approval to the applications?
- Will they at least approve the 19b-4 form filings?
- Will the SEC's comments raise red flags about Ethereum's status as a security?
While most analysts anticipate a rejection in this round, there is still uncertainty regarding whether this has been fully priced in over the past two months.
If it has, it suggests that a positive surprise from the SEC, even a minor one, could trigger a significant upward move for ETH.
Here's a potential scenario: The SEC goes with the “slow play” approach and approves the 19b-4 filings without mentioning concerns of ETH being a security.
If this happens, ETH could experience a swift recovery after an initial period of volatility. That’s because this outcome would signal the SEC's openness to future approval, potentially triggering a surge in investor confidence.
Remember, this is just speculation. The actual outcome and market reaction could be very different. Not to mention the fact that a full application denial is still likely.
Regardless, this week's announcements can be a major catalyst for the ETH price volatility. So, hold onto your seats. Things might get choppy this week.
Best,
Marija Matić
