Markets
Bitcoin hits $71k and Ethereum soars on ETF news
Bitcoin (BTC) experienced a price surge, reaching over $71,000, marking its highest level since early April.
The recovery was fueled by robust flows into exchange-traded funds (ETFs) and a general bullish sentiment in the cryptocurrency market. The sharp rise in Bitcoin’s price was accompanied by substantial gains in other major cryptocurrencies, including Ethereum (ETH).
Ethereum rises 22%, boosted by ETF approval hopes
Ethereum (ETH) also saw a price increase, rising over 22% to surpass the $3,600 mark, trading at $3,770. This increase was further driven by growing expectations of an Ether ETF approval in the US. Bloomberg analysts Eric Balchunas and James Seyffart increased the probability of this approval to 75%, significantly higher than their previous estimate.
To update: @JSeyff and I’m increasing our odds of spot Ether ETF approval to 75% (up from 25%), hearing talk this afternoon that the SEC could be doing a 180 on this (increasingly political issue), so now everyone is scrambling (as we , everyone assumed they would be denied). To see… https://t.co/gcxgYHz3om
-Éric Balchunas (@EricBalchunas) May 20, 2024
The anticipation of a Ether ETF Approval has been one of the main drivers of market optimism. Analysts suggest that such approval could open the doors to substantial institutional investments in Ethereum, similar to the impact seen with Bitcoin ETFs. The spot Bitcoin ETF, which began trading in January, has already accumulated $12 billion in total inflows, attracting interest from major commercial companies and state funds.
Market Reactions and Short Liquidations
The recovery in cryptocurrency prices has led to market reactions, especially among traders who have taken short positions. Short positions are bets against higher price movements, and when prices rise sharply, these positions can incur substantial losses.
According to Coinglass Datathe sudden price movements resulted in more than $260 million in short liquidations.
Binance recorded the highest amount of liquidations, totaling over $130 million, followed by OKX with $118 million and Huobi with $51 million. Short positions in Ether suffered the most, with losses exceeding US$115 million, reflecting the sharp increase in the price of Ethereum. The forced closure of these leveraged positions indicates the volatility and risk associated with trading the cryptocurrency markets.
Optimism surrounding Ether ETF approval
The higher odds of approval for the Ether ETF have significantly contributed to the bullish sentiment in the market. The US Securities and Exchange Commission (SEC) has reportedly asked aspiring Ether ETF exchanges to update their 19b-4 filings ahead of a key deadline, further fueling speculation about an imminent approval. Market participants view the potential approval of an Ether ETF as a major positive development that is likely to attract substantial institutional capital.
QCP Capital, a Singapore-based trading firm, expressed the view that approval of a spot Ether ETF could push Ether prices closer to $4,000, while a denial could see prices fall back. to $3,000. The company highlighted the accelerated updates to 19b-4 filings as a strong indicator that approval could be close.
In addition to Bitcoin and Ethereum, other major cryptocurrencies also recorded gains amid the general bullish market sentiment. XRP, Cardano (ADA), Solana (SOL), and Dogecoin (DOGE) saw price increases ranging from 3% to 6%, according to CoinGecko Data. These gains, while smaller than those of Bitcoin and Ethereum, reflect positive momentum across the broader cryptocurrency market.