Bitcoin Surges as Investors Flock to BTC Spot ETFs Amid SEC’s Impending Ethereum ETF Decision

May 20, 2024

Bitcoin experienced a notable surge, closing last week with a 7.8% gain as high inflows into BTC Spot ETFs bolstered investor sentiment. The cryptocurrency market witnessed steady price action throughout the week, with Bitcoin’s price reaching approximately $66,300 by the week’s end. 

Bitcoin, the world’s largest crypto asset by market capitalization, closed the week on a positive note as it recorded a nearly 8% increase in value and continued to trade over the weekend to as high as $67,000. 

This surge came amid a resurgence in demand for BTC Spot ETFs, with approximately $950 million in net inflows recorded last week, marking a significant turnaround from five weeks of consecutive outflows, Matteo Greco, research analyst at the publicly listed digital asset and fintech investment business Fineqia International, said in a note sent to The Shib Daily.

“Last week’s positive price movement was also driven by increased demand for BTC Spot ETFs. After five weeks of low demand, resulting in about $1 billion in cumulative net outflows, BTC Spot ETFs saw about $950 million in net inflows last week, reflecting a demand level not seen since March,” the research analyst added.

Greco highlighted the significance of Grayscale’s ETF (GBTC) transitioning from a trust to an ETF in January 2024, as it experienced its first weekly net inflow. This shift suggests a potential reversal in the trend of outflows, which amounted to approximately $17.6 billion since the beginning of the year, bringing GBTC’s inflow/outflow patterns in line with its competitors.

Regarding trading activity, the research analyst noted that trading volume for BTC ETFs remained stable, with cumulative trading volume since inception reaching $262.6 billion. During the week, trading volume stood at $8.6 billion, consistent with recent weeks’ figures. This stability maintained daily trading volumes within the range of $1.5 to $2 billion, following a period of heightened activity in February and March.

While Bitcoin enjoys this bullish momentum, regulatory developments loom large over the cryptocurrency landscape. The SEC is set to make a crucial decision regarding Ethereum Spot ETFs, with final deadlines for VanEck and Ark 21Shares filings on May 23rd and 24th, respectively.

According to Greco, market participants are bracing for the potential outcomes of the SEC decision, with concerns over the liquidity of ETH’s spot and futures markets and its previous classification as a security by the SEC. This regulatory uncertainty surrounding Ethereum contrasts with the recent approval of BTC ETFs in January, highlighting the complexities of navigating the regulatory landscape.

Moreover, an alternative scenario involving the approval of 19b-4 filings while “slow-playing” the S-1s adds further intricacies to the regulatory framework. This nuanced approach by the SEC could impact the trajectory of Ethereum Spot ETFs and broader market dynamics.

As Bitcoin continues to chart its course amid high inflows into BTC Spot ETFs, the regulatory landscape remains a critical factor shaping investor sentiment and market sentiment. Whether the SEC approves or rejects Ethereum Spot ETFs, the decision will reverberate across the cryptocurrency market, influencing investment decisions and market trends in the weeks and months ahead.

Yona has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice.

The Shib Daily is an official media and publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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