Bitcoin surges to $71k as analysts cite increased spot ETF inflows

Analyst expects renewed market confidence as Bitcoin surges to $71,000

Bitcoin’s price surged to $71,000 on Tuesday amid increased spot buying and spot BTC exchange-traded fund (ETF) purchases, prompting the cryptocurrency community to debate whether this signals the start of a bull market or its peak.

At the time of writing, the world’s largest cryptocurrency exchanged hands at $70,950, with a massive 24-hour trading volume of $52.4 billion. The crypto asset’s market cap currently stands at $1.39 trillion.

Matteo Greco, research analyst at Fineqia International, has highlighted the increasing investor interest and inflows in Bitcoin spot ETFs as a key driver of Bitcoin’s recent price surge, suggesting a renewed confidence in the market.

Bitcoin closed last week at approximately $66,300, reflecting a 7.8% climb from the prior week’s close of around $61,500.

“The week was characterized by low daily volatility, with most of the price increase occurring on Wednesday, while the rest of the week exhibited stable price action,” Greco said in a statement to crypto.news.

Renewed interest in Bitcoin ETFs

After five weeks of low demand, resulting in about $1 billion in cumulative net outflows, the recent rebound near $60,000 has reignited interest, with Farside Investors reporting about $950 million in inflows last week, a level not seen since March.

According to Greco, GBTC was not the only U.S. spot BTC ETF that drew investor funds last week. The development follows a possible trend reversal for Grayscale’s converted GBTC fund, which experienced its first weekly net inflows in 19 trading weeks last week. The analyst said GBTC received $31.6 million in net inflows between May 13 and May 17. 

However, last week’s GBTC movements paled in comparison to the approximately $17.6 billion in outflows since January, when the U.S. Securities and Exchange (SEC) approved spot Bitcoin (BTC) ETFs. 

With a resurgence in spot Bitcoin ETF inflows and Bitcoin’s price recovery, the Fineqia International analyst believes attention will now shift to spot Ethereum (ETH) ETFs. 

Potential outcomes for spot Ethereum ETFs

The SEC is set to make a decision on VanEck and ARK 21Shares’ filings on May 23 and 24, respectively. 

“Market participants expect the SEC to withhold approval for these products, despite approving BTC ETFs in January,” Greco stated, echoing predictions from Bloomberg experts.

On May 21, Ethereum surged 18% following an announcement by Eric Balchunas, a senior analyst at Bloomberg, who raised the odds of Ethereum exchange-traded fund approval from 25% to 75%.

Balchunas noted that the U.S. SEC’s accelerated pace to approve the ETF could be due to political pressure, noting that the agency had previously shown minimal involvement with ETF applicants.

“Concerns over the liquidity of ETH’s spot and futures markets, along with its previous classification as a security by the SEC, contribute to skepticism about swift approval. If rejected, issuers would need to resubmit filings, potentially leading to approval in Q4 2024 or Q1 2025 at best.”

Matteo Greco, research analyst at Fineqia International

In contrast, the Fineqia analyst believes the Securities regulator might approve 19b-4 filings while delaying S-1 approvals. S-1s are registration statements that are mandatory for firms prior to the public offering of securities, whereas 19b-4 forms are used to propose rule changes with the SEC. 

The securities watchdog must approve both firms before spot Ethereum ETFs can be traded on U.S. national exchanges. Greco stated that if the SEC follows this path, it might use the opportunity to thoroughly examine the Ethereum market and possibly decide whether or not ETH is a security.

The analyst concluded, “This decision could be favourable for issuers,” as traditional finance investors seem to remain strongly focused on BTC, potentially reducing market activity around ETH Spot ETFs “if launched next week.”