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Bitcoin & Ethereum Continue Rising

Plus500 | Tuesday 05 March 2024

In recent days, enthusiasm has swept the Crypto sector as Bitcoin’s price reaches skyward and optimism prevails among Ether traders. What could be behind these trends? Let’s take a closer look:

An illustration of Bitcoin price chart

Can Bitcoin’s Climb Be Stopped?

Bitcoin (BTCUSD) is nearing its all-time high, sparking excitement among some Cryptocurrency enthusiasts. Although the price hasn't reached its previous peak, Bitcoin's market capitalization has already surpassed its previous record, hitting $1.35 trillion compared to the previous peak of $1.28 trillion in November 2021. Over the past week, Bitcoin traders have pushed the digital coins price up 17%.

Some analysts have been suggesting that historically, a record market value indicates the beginning of a new phase in the market. Recent gains in Bitcoin have been fueled by demand from new US spot Bitcoin exchange-traded funds (ETFs) and expectations of a reduction in supply growth. These ETFs, introduced by BlackRock Inc. and Fidelity Investments, have attracted over $7 billion in net inflows since their launch on January 11.

The resurgence of speculative activity extends beyond Bitcoin, with increased activity seen in derivative markets and meme coins. However, this heightened speculation raises concerns about potential market reversals if ETF flows decline and optimism wanes.

Overall, while Bitcoin's price may not have reached its previous peak, its market capitalization has set a new record, driven by various factors including ETF demand and expectations of reduced supply growth. However, the market's reliance on speculative fervour and potential risks associated with a cooling of optimism highlight the need for caution moving forward. (Source: Bloomberg)

SEC Delays Ether ETF Approval

Despite the widespread market optimism sparked by the prospect of new Ethereum (ETHUSD) ETFs hitting the scene, a potential roadblock in the form of regulation from the Securities and Exchange Commission could put a damper on the festivities.

The US Securities and Exchange Commission (SEC) has postponed its decision on BlackRock and Fidelity's proposed spot Ether exchange-traded funds (ETFs). The SEC, in filings on March 4, announced the delay in deciding on BlackRock's iShares Ethereum Trust and Fidelity's Ethereum Fund applications.

This delay follows a previous postponement in January, following SEC approval of spot Bitcoin ETFs. The SEC can extend its deliberation up to three times before reaching a final verdict. Market observers have anticipated this delay, speculating that the SEC will likely decide on these ETFs by the final deadline in May.

Bloomberg ETF analyst James Seyffart highlighted May 23 as the crucial date for Ethereum ETFs, echoing sentiments about the significance of this deadline. Despite the delay, Ether's price continues to rise, reflecting broader market optimism. Ether has surged by 14% in the week.

While some anticipate the potential approval of Ether ETFs, not everyone is convinced of their significance compared to Bitcoin ETFs. BlackRock's iShares Bitcoin ETF has amassed $10 billion in assets under management, dwarfing expectations for Ether ETFs. Some analysts further suggest that Ether ETFs may be less impactful than their Bitcoin counterparts, describing them as "small potatoes" in comparison.

Conclusion

In conclusion, Bitcoin's surge to a near-all-time high may excite the Cryptocurrency community, driven by factors like reduced supply growth and increased demand from US spot Bitcoin ETFs. 

However, reliance on speculation raises concerns for potential reversals. Furthermore, Ether's price has continued on an uptrend, reflecting ongoing optimism despite SEC approval woes. Where the Crypto market as a whole will head in the coming trading days remains anyone's guess.


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