Crypto Market Soars Amid Potential Ethereum ETF Approval and Increased Institutional Investment
Summary:
Crypto markets saw a surge on May 21 with a total market cap increase of 6.66% to $2.6 trillion. This surge could be attributable to the possibility of an Ethereum ETF approval and a bullish market structure which encouraged traders. Leading the gains were Bitcoin and Ether with an increase of approximately 6.4% and 18.5% respectively. Furthermore, institutional investments in crypto are witnessing an uptrend, with inflows into cryptocurrency investment products totaling $932 million for the week ending May 17. Overall, the growing acceptance of cryptocurrencies in traditional finance, coupled with strong market dynamics, is contributing to the rise of the crypto market valuation.
This piece is not presenting investment counsel or suggestions. Each investment and trading action carries risk, therefore, readers should do their own investigations prior to making choices. May 21 saw a surge in cryptocurrency markets with a 6.66% increase to a total market cap of $2.6 trillion. Simultaneously, Bitcoin (BTC) market dominance witnessed a dip of 1.44% to rest at 52.6%. The possible approval for an Ethereum ETF spot and a market bullish momentum is what encouraged traders. Bitcoin and Ether (ETH) dominated the surge, with a respective approximate increase of 6.4% and 18.5%.
Let's unravel why the cryptocurrency market has spiked today.
Look forward to higher prices as the likelihood of spot Ethereum ETF approval increases
Crypto enthusiasts are banking on a speculated approval on a spot Ether exchange-traded fund (ETF) after the United States Securities and Exchange Commission (SEC) hinted at a potential change in its stand over the issue, allegedly due to political influences. This change follows a call for ETF exchanges to update their 19b-4 filings.
Eric Blachunas, senior ETF analyst at Bloomberg raised the probability of an approval from 25% to 75% referencing the SEC's sudden shift on this increasingly political issue.
In another context, files showcased Grayscale upgrading its Ethereum Mini Trust 19b-4 form. On May 21, there was a 27% surge for ETH, reaching an intra-day peak of $3,875. If an Ethereum spot ETF is approved, the prices of Ether and other cryptocurrencies are projected to soar even higher.
Investors are flowing back to the cryptocurrency investment funds
CoinShares data shows that cryptocurrency investment products witnessed inflows of nearly $932 million in the week that ended on May 17. This implies an increase in institutional exposure to digital currencies, as reported by CoinShares' “Digital Asset Fund Flows Weekly” on May 13. Most of the inflow was reported in Bitcoin investment funds collecting $942 million.
The weekly trading volumes of investment products have dropped from an average of $40 billion in March to $10.5 billion for the week ending May 17. James Butterfill, head research, CoinShares, recounted that this was in response to the lower-than-expected CPI report on Wednesday.
Meanwhile, Farside Investors accounted for nearly $947 million inflow into spot Bitcoin ETFs during the last week, a volume that was not seen since March. After suffering a $16.6bn worth of outflows post the January ETF launch, Grayscale observed minor inflows as well.
This inflow coincided with around 700 firms reporting Bitcoin ETFs holdings in their portfolios. This increasing grid of disclosures and the uptick in institutional funds inflowing into cryptocurrency investments, affirm the growing approval and adoption of Bitcoins and other cryptocurrencies in traditional finance. This is a key factor contributing to the rise of crypto market valuations today.
Strengthening market dynamics
From a technical standpoint, these gains are part of a bounce back from a risk support confluence encompassing the 50-day exponential moving average (EMA) and the upper-edge of an advancing descending triangle pattern.
Descendant triangle patterns within an uptrend are seen as bullish continuation patterns. They are resolved when the price passes the upper trendline and grows to the maximum height of the triangle. The TOTAL market cap broke this triangle on May 15, this means that the market could rise towards a technical end of the governing chart pattern at $2.72 trillion by June.
This piece does not offer any financial advice or suggestions. Every financial or trade manoeuvre involves an element of risk. Therefore, readers are advised to carry out their own investigation when making a decision.
Published At
5/21/2024 10:32:06 PM
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