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Bitcoin Price Hits $70,000, Could Ethereum ETF Approval Rumors Help Altcoins Follow?

Last Updated May 21, 2024 3:29 PM
Teuta Franjkovic
Last Updated May 21, 2024 3:29 PM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Cryptocurrency prices surge as US approval for Ethereum ETFs seems more likely, marking a shift in market sentiment.
  • Ethereum’s price has jumped significantly due to the anticipation, while Bitcoin nears its previous record high.
  • Limited ETH supply and increased demand from traditional investors could spark a broader altcoin rally.

Cryptocurrency prices have risen sharply due to growing momentum towards US approval of Ethereum exchange-traded funds.

This marks a shift from the more pessimistic outlook observed just last week. Meanwhile, some altcoins are already showing significant gains.

Ethereum Surges Amid Speculation of Potential SEC Approval for ETFs

The speculative interest in Ethereum ETFs echoes the enthusiasm previously seen with Bitcoin ETFs in the US. Their January launch spurred a significant rally in the value of Bitcoin, pushing it to a record high. Meanwhile, Ethereum’s price , jumped almost 14% on Monday—the largest increase since November 2022. It continued to rise, reaching $3,675 on Tuesday mornng. Similarly, Bitcoin approached $72,000,  nearing its mid-March record peak of nearly $74,000.

According to sources, the US Securities & Exchange Commission (SEC) has reached out to at least one exchange and one potential issuer of a spot-Ethereum ETF to request updates on their 19b-4 filings. This suggests that the likelihood of SEC approval might be improving, although the outcome remains uncertain.

Potential Ethereum ETF Approval Could Spark Altcoin Rally

The potential approval of an Ethereum ETF could have a profound impact on ETH’s price. While Bitcoin boasts a market capitalization  of $1.4 trillion, Ethereum’s market cap  is considerably smaller at $440 billion. This means ETH price movements can be more pronounced. Additionally, the availability of ETH on exchanges is currently at an all-time low , with only 9.9% of the total supply accessible for trading.

When Ethereum transitioned to a proof-of-stake mechanism in 2022, it stopped relying on miners to add supply to the market. This, in turn, made ETH effectively deflationary as the overall supply decreases. Ethereum is also widely used in various capacities such as staking, farming, serving as collateral, and in decentralized finance (DeFi). This further limits the amount of ETH available for straightforward purchasing.

Given these conditions, even moderate inflows from traditional finance investors could significantly drive up Ethereum’s price. This surge in ETH’s price, if catalyzed by ETF approval, could also trigger a substantial rally in the broader altcoin market. Tokens like Solana and Avalanche, along with various Layer-2 altcoins, could see significant gains in the wake of Ethereum’s potential rise.

Bitcoin Bull Market Fueled by ETF Inflows and Scarcity

The renewed interest in Bitcoin ETFs  marks a significant shift following weeks of outflows, with nearly $1 billion injected into the funds.

Bitcoin ETFs are gaining interest
Credit: X.com/James Straten 

This infusion has spurred market activity, resulting in substantial liquidations. Over the past 24 hours, more than  $235 million in positions have closed, including $63 million in Bitcoin short positions alone.

On-chain metrics are signaling the onset of a bull market for Bitcoin , despite some indicators suggesting a potential peak. The cryptocurrency’s recent rebound to near $60,000 levels has reignited investor interest. Farside Investors recorded about $950 million in inflows last week, a surge not seen since March. Bitcoin has climbed 51% so far this year, driven by expectations of US monetary expansion, with the M2 monetary base hitting over $21 trillion in April 2024—an indicator of rising inflationary pressures amid cautious spending by companies and individuals.

Bullish Momentum Amidst Potential Market Correction

Also, the Federal Reserve’s ongoing efforts to control inflation and stave off recession influence market liquidity and the appeal of assets like Bitcoin. The cryptocurrency reached a new all-time high of $73,737 in March, largely propelled by ETFs, and currently sits just 5% below that.

Meanwhile, Bitcoin reserves on major exchanges have dwindled to a seven-year low. CryptoQuant data  indicates only 1,918,417 BTC available as of May 19—a significant decrease from the previous year. This scarcity is further accentuated by the recent halving, which slashed the potential new supply from miners. As a result, a bearish outlook on Bitcoin, at least in the short term, is increasingly untenable.

BTC reserves
Credit: CryptoQuant

As the crypto community closely monitors Bitcoin’s price movements, speculation abounds regarding whether the digital asset will sustain its upward trajectory or face a significant correction in the weeks ahead.

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