BTC Jumps 6% to $70,000 as Ethereum ETF Rumors Cause Market Frenzy

bitcoin (btc) surpassed the $70,000 mark on May 21, marking a major milestone driven by a flood of investments in spot bitcoin exchange-traded funds (ETFs) and a broader market rally.

bitcoin price rose to $70,325, up 6% in 24 hours, before settling at $68,700 at press time, according to cryptoslate data.

ethereum (eth) arguably led the rally in recent hours, seeing a staggering 14.5% surge in one hour on Monday amid speculation that the US SEC could approve ethereum spot ETFs.

eth rose from $3,143 to $3,518 at press time.

Renewed interest

The renewed interest in bitcoin ETFs comes after weeks of capital outflows, with nearly $1 billion flowing into these funds, providing investors exposure to the leading digital asset.

The surge has sparked major liquidations in the market, with more than $235 million in positions closed in the last 24 hours, including $63 million in short bitcoin positions alone, according to CoinGlass.

Analysts indicate that most on-chain metrics suggest the beginning of a bull market even though some show signs of a possible peak. The recent bounce near $60,000 has sparked renewed interest, with Farside Investors reporting approximately $950 million in inflows last week, a level not seen since March.

bitcoin's 51% year-to-date gain reflects investor anticipation of US monetary expansion, as evidenced by the fact that the M2 monetary base surpassed $21 trillion in April 2024. This rise in Money in circulation suggests rising inflationary pressures despite a period of hesitation in spending by businesses and individuals.

Meanwhile, the Federal Reserve's efforts to manage inflation and avoid a recession could affect the liquidity and attractiveness of assets like bitcoin.

Shortage

bitcoin hit a new all-time high of $73,737 in March and is now just 5% below that level. The recent run appears to be largely driven by new bitcoin ETFs, which trade on traditional stock exchanges and allow investors to buy stocks that track the price of the asset.

Supporting the bullish sentiment, bitcoin reserves on major exchanges have fallen to their lowest level in seven years. Data from CryptoQuant shows that only 1,918,417 btc were available on major trading platforms as of May 19, a significant decrease from the previous year.

This shortage, coupled with the recent halving event that reduced miners' potential new supply, makes a bearish outlook on bitcoin increasingly difficult to justify.

The crypto community continues to closely watch bitcoin price action develop, with many wondering whether the digital asset will continue its rise or face a significant correction in the coming weeks.

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