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 critical moment for whether the U.S. Securities and Exchange Commission will approve the Ethereum spot ETF will come on Thursday. The regulator needs to make initial and final decisions on the applications of VanEck and Ark/21Shares on the 23rd and 24th respectively, and the final decision on Grayscale must be made on the 30th.
Ethereum (ETH) surged 18% in 24 hours as new speculation emerged that a spot ether exchange-traded fund could be approved this week, despite months of pessimism.
Bloomberg ETF analysts Eric Balchunas and James Seyffart said there are “rumors” that the U.S. securities regulator is asking applicants to expedite 19b-4 filings.
This helped the duo increase their approval ratings from 25% to 75%.
On decentralized betting platform Polymarket, the odds of an approved spot ether ETF similarly increased from 11% to 54%.
Ether, currently priced at $3,625, has risen 16.1% since the news broke more than three hours ago and is up 18% in 24 hours, according to Coingecko.
The news comes just days before the U.S. Securities and Exchange Commission must make a final decision on VanEck’s spot ether ETF application on May 23.
However, Seyffart made it clear that an approved 19b-4 must be accompanied by a signed S-1 registration statement in order to launch a spot ether ETF.
Even if the 19b-4 is approved this week, it could take weeks or even months for the S-1 to be approved, he said.
"That said, if we are correct, we would see these theoretical approvals later this week. This *should* mean that S-1 approval is a matter of 'when' rather than 'if' ..."
The idea that the SEC could approve 19b-4 and S-1 filings in two parts was first floated on May 19 by Nate Geraci, president of The ETF Store.
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.
“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 Bitcoin prices have 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.
The overall cryptocurrency market gained 7.8% over the past 24 hours, surpassing a $2.7 trillion market cap for the first time since April 11.
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