Markets
Why is the crypto market booming today? Is this the start of a new rally?
The cryptocurrency market has seen a significant increase in the last 24 hours, reaching around $2.75 trillion during Tuesday’s Asian session. Leading this increase was Ethereum (ETH), which jumped 20% to about $3,699. The ETH/BTC pair also rose more than 13%, indicating a strong shift in investment from Bitcoin to Ethereum.
Ethereum’s impressive rise highlights its pivotal role in the recent cryptocurrency recovery. This shift led to a rapid movement of capital into the market, with many investors switching from Bitcoin to Ethereum.
What’s up with Bitcoin?
While everything seems fine with Ethereum, Bitcoin – not so much!
Bitcoin’s market dominance shows signs of a potential slowdown, indicated by a bearish divergence in the Relative Strength Index (RSI). This technical signal suggests that Bitcoin could face further declines soon.
Key Factors Behind Crypto’s Rise Today
Potential SEC Approval of Ether ETFs
The market was boosted by news that the US Securities and Exchange Commission (SEC) may soon approve spot Ether ETFs. This could be an important milestone for the broader altcoin market, acting as a strong bullish trigger.
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
Political Changes
Politically, the Biden administration has softened its stance on cryptocurrency, in contrast to former President Donald Trump’s approach. Trump’s recent endorsement of the crypto industry has also attracted significant attention ahead of this year’s elections.
Short squeeze in action?
Recently, Bitcoin and Ethereum were trading below $60,000 and $3,000, respectively, leading many derivatives traders to expect further declines. However, the market rally led to the liquidation of over $350 million in short positions, causing many traders to start buying, which triggered short pressure.
Regulatory developments around the world
US Congressional Efforts
The US Congress has been working hard to regulate the cryptocurrency industry, with the aim of establishing clear guidelines ahead of the November elections. This regulatory clarity is expected to attract more institutional investors.
Any central bank digital currency that is not open, permissionless, and similar to private money is nothing more than a major government surveillance tool.
This week, the @HouseGOP will take action to prevent the Fed from issuing one by passing our CBDC State Anti-Surveillance Law. pic.twitter.com/d55gwBOAUz
-Tom Emmer (@GOPMajorityWhip) May 20, 2024
India’s move towards crypto regulation
In India, the government is moving towards adopting and regulating cryptocurrency, following the European Markets for Crypto Assets (MiCA) framework. This clearer regulatory environment is encouraging more institutional investors to enter the crypto market.
Read too: Top Altcoin Set to Outperform This Week as Crypto Bull Run Begins
Do you think Ethereum will continue to outperform Bitcoin?