On Tuesday (May 21), Bitcoin soared to nearly $72,000, and Ethereum soared to over $3,720. Bloomberg ETF analyst Eric Balchunas revealed that he had heard market rumors and quickly increased the probability of Ethereum spot ETF approval from 25% to 75%. After the U.S. Consumer Price Index (CPI) hinted at a slowdown in inflationary pressures, crypto asset investment products accumulated $932 million between May 13 and 17.
The key moment for the SEC to approve the Ethereum spot ETF will come on Thursday. The regulator needs to make initial and final decisions on VanEck and Ark/21Shares' applications on the 23rd and 24th respectively, and the final decision on Grayscale will be made on the 30th. #ETH #BTC
Balchunas made a rare post saying: “I raised the probability of Ethereum spot ETF approval to 75%, up from 25%. I heard some rumors this afternoon that the SEC may make a 180-degree turn on this (increasingly political issue), so now everyone is scrambling (like us, others also thought it would be rejected).”
Bloomberg analyst James Seyffart later added that what raised the chances of passing to 75% was Rule 19b-4 (changes to exchange rules), and that an S-1 (registration statement) application would be needed in the future.
He wrote: “Just a quick note, Balchunas and I have increased the odds of an Ethereum spot ETF approval to 75%. But that’s for the May 23 deadline for Rule 19b-4. We also need S-1 approval. It could be weeks to months before we see an S-1 approval and an actual live Ethereum spot ETF.”
Nate Geraci, president of ETFStore, previously mentioned: “Technically, it is possible for the SEC to approve 19b-4 but slow down the implementation of S-1, especially given the lack of active participation from regulators.”
Although the final position of the U.S. Securities and Exchange Commission has not yet been determined, the price of Ethereum still skyrocketed after the news came out. After the news came out, it soared from around US$3,150 to a high of US$3,720, an increase of more than 20% in nearly 12 hours.
According to CoinShares data, $932 million was accumulated in crypto asset investment products between May 13 and 17, driven by an immediate reaction to the US CPI report, which seemed to indicate that inflationary pressures were slowing again. Despite the high net flows, weekly trading volume was still relatively low at $10.5 billion, in stark contrast to the $40 billion observed in March.
(Source: CoinTelegraph)
“Interestingly, inflows were an immediate reaction to Wednesday’s weaker-than-expected CPI report, with the last three trading days of the week accounting for 89% of total flows, underscoring our view that the Bitcoin price has re-coupled with interest rates.”
The U.S. CPI report released on May 15 showed that inflation rose 0.3% in April, following a 0.4% increase in March. Driven by significant growth in the energy and food sectors, the CPI rose 3.4% year-on-year.
CoinShares Research pointed out in a previous analysis that after the Bitcoin spot ETF was approved by the United States in January, the factors affecting Bitcoin prices were re-aligned with market expectations for interest rates.
Grayscale's Bitcoin spot ETF (GBTC) saw small inflows this week, totaling $18 million. Since the conversion in January, the fund has seen outflows of $16.6 billion. In terms of regions, Hong Kong and Canada saw outflows of $83 million and $17 million, respectively.
Bitcoin Technical Analysis
Analyst ELI5 of TLDR said that most on-chain indicators point to a nascent bull run, although some show a topping pattern. The recent rebound near the $60,000 support level has sparked more interest, with Farside Investors reporting inflows of around $950 million last week, a number not seen since March.
If this trend continues, Bitcoin could exceed expectations. Currently, Bitcoin is trading within a few hundred dollars of $70,000, with the 20-day moving average at $64,371 and the RSI positive, indicating a higher probability of an upward breakout. Overcoming the $68,000 resistance level suggests that Bitcoin price is expected to rise to $73,777, although this level may trigger a strong bearish reaction.
Conversely, a break below the moving averages could signal a bearish downturn that can drop to $59,600 and $56,552.
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