The crypto market rebound caught people off guard

On Monday afternoon, Eastern Time, Bloomberg ETF analysts wrote that as crypto investment tools are becoming increasingly politicized, the probability of the SEC approving the spot Ethereum ETF 19b-4 has increased from 25% to 75%. Multiple sources revealed that the SEC is asking exchanges to speed up the update of the 19b-4 application for the spot Ethereum ETF, which has swept away the pessimism in the community and brought new hope for the eventual approval of the product.

After the news was released, Ethereum's rise was almost out of control, soaring from about US$3,150 to over US$3,600 in just three hours, hitting a new high since mid-April and rising 19.03% in 24 hours.

Bitcoin also rebounded to the $70,000 mark for the first time since mid-April, up $4,000 from its intraday low and up nearly 5% in 24 hours.

Is there hope for Ethereum spot ETF approval?

Prior to today, the cryptocurrency market was generally pessimistic about the prospects for approval of an Ethereum ETF.

First, the question of whether Ethereum itself is a security has yet to be determined, which is the core issue in the SEC's case against several cryptocurrency exchanges. The determination of this issue will directly determine the fate of the cryptocurrency market and whether it needs to be disclosed as a security ETF.

Bitcoin, by contrast, has never faced such debate and has long been considered a commodity, making it a less constrained ETF component like gold.

Secondly, Ethereum has greater market volatility and a shorter history than Bitcoin, so the regulatory opacity risks and market manipulation risks mentioned by the SEC before may be greater for Ethereum. Therefore, most market participants, including big-name institutions such as Bitwise and Coinbase, do not have high expectations for approval. Coinbase gave a probability of "30% to 40% chance of approving the Ethereum spot ETF", while Bitwise's general counsel Katherine Dowling said more directly, "Most people expect the SEC not to approve it."

Why did the SEC suddenly make a 180-degree turn?

Perhaps, as analyst Eric Balchunas suggests, American politics is the main factor.

Last Wednesday, Coinbase said in a research report that Ethereum (ETH) has the potential to bring unexpected gains. The market may underestimate the timing and likelihood of approval of a U.S. spot Ethereum ETF. Report author HAN said that if the SEC rejects the spot ETH ETF, it will consume U.S. Democratic Party capital, which is not a wise strategy in an election year. Currently, SEC Chairman Gensler and two other voting members are Democrats, and the remaining two voting members are Republicans. Overall, the top SEC is still dominated by Democrats. Previously, Trump expressed support for cryptocurrencies and loudly called on voters to vote for candidates who support cryptocurrencies. If the Biden administration continues to take a tough stance on cryptocurrencies, it may be unfavorable to its election prospects.

Another major event worth paying attention to is the repeal of SAB 121. On May 17, the Senate passed H.J.Res 109, which overturned SEC Staff Accounting Bulletin No. 121 (SAB 121). The bill passed by a vote of 60 to 38, indicating that a bipartisan majority supports it. SAB 121, released in 2022, requires digital asset custodians to treat digital assets as liabilities and hold them at fair value on their balance sheets. For example, if a bank custody $1 billion in Bitcoin for a client, it must hold $1 billion in cash to offset this "liability" on its balance sheet. This provision prevents financial companies from custodial Bitcoin and other cryptocurrencies. The White House previously issued a statement saying that if H.J.Res 109 reaches President Biden's desk, he will veto it. Biden can choose to sign, veto, or take no action. If he chooses not to act, the bill will take effect without his signature. If Biden ultimately chooses to sign or take no action, this will truly represent a radical change in the attitude of the Democratic Biden administration in the field of cryptocurrency.

The SEC faces May 23 and May 24 deadlines to make decisions on VanEck and ARK’s Ethereum ETF applications, respectively.

Another time point worth paying attention to is August. August 3 is the deadline for Fidelity's Ethereum ETF, and August 7 is the deadline for BlackRock's Ethereum ETF.

We may not see the dawn of victory in May, but we may see it in August.

Ethereum is the largest altcoin, so alt season is coming!

This wave of market has taken off. Let's summarize the reasons for this surge:

First, there are rumors that the SEC will make a 180-degree turn on approving a spot Ethereum ETF. If this news is realized, it will be a major positive. The introduction of ETFs will bring a large amount of funds into the market and increase the market value.

Second, there are reports that the US dollar will see a rate cut. Although the official rate cut has not yet been announced, many small and medium-sized banks in the United States are already preparing for the rate cut. This rate cut will bring capital flows, and a large amount of US dollars will flow into various high-quality assets, especially the Bitcoin market.

Good news for Ethereum is coming, what opportunities should the altcoins pay attention to!

Focus on major volatile areas: MEME, L1, AI, and games

There is a high probability that these fields will give birth to high-value altcoins with high returns (25 times or more). In addition, DeFi and infrastructure can be secondary or even ignored. Projects in the four fields of MEME, L1, AI, and games may reach the next major upward trend in January 2024.

Why? Most of the projects with a high increase (7-30 times) from the main uptrend starting at the end of October 2023 to March 2024 (up to April) were listed on Binance between March 2023 and November 2023. These projects include:

L1: SEI、SUI、TIA、NTRN；

MEME：PEPE、FLOKI、ORDI、WIF；

AI：WLD。

Therefore, no matter when the next level of the main uptrend comes, please pay attention to the projects that are launched on Binance (preferably the first launch) from January 2024 (can be pushed to December 2023) to before the opening of the next level of the main uptrend. For example:

L1: W、Saga、Omni、BB；

MEME：Trees；

Games: Pixel, AI, Ace, Portal, XAI, Not.

These projects were launched between January this year and today. Therefore, from now until the next major uptrend, please pay special attention to projects launched on Binance, especially those that are popular in the market or have new funds, such as RWA. Pay more attention.

The high-return altcoins in the next large-scale main upward wave may come from the above projects!

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