After weeks of subdued market activity, Bitcoin has initiated a strong rebound. On May 21st, it surged past the $71,000 mark for the first time since mid-April, currently trading at approximately $71,840—a 24-hour gain of over 7.16%.
Ethereum, which had been underperforming relative to Bitcoin, also experienced a significant rally. It continuously climbed to break through $3,700, now trading around $3,683 with an impressive 24-hour increase of 20%.
This broad market upswing triggered a widespread rally across the Ethereum ecosystem's altcoins. Notable performers include METIS, up 35.26%; PENDLE, gaining 26.2%; and ENS, which rose 22.6%. Other significant movers were REZ, ETHFI, SSV, and UNI, each posting substantial double-digit gains within the same period.
The Driving Force Behind the Rally
In this ETF-dominated bull market, the most critical indicator for Bitcoin's price movement remains the net inflows into its spot ETFs. Data from Farside Investors reveals that U.S. spot Bitcoin ETFs have seen consistent net inflows starting from May 13th, accumulating a total of over $1.113 billion in net inflows within a single week.
While Bitcoin spot ETFs are pushing the crypto market into a bull phase, they also bring heightened regulatory scrutiny. For years, regulatory focus has centered on individual actions and how the technology is used. This has transformed a neutral technological stack into a heavily partisan issue, creating deep divisions regarding its integration into the U.S. financial system and beyond.
The increasing politicalization of cryptocurrency is now evident, with U.S. presidential candidates from both major parties leveraging the industry. Key players are planning to use the crypto world to garner both financial support and votes. Although this trend has been criticized within certain circles, it continues to gain momentum.
This political dimension can, in turn, influence spot ETF decisions. Following the approval of Bitcoin ETFs, market attention naturally shifted to Ethereum. However, the longstanding debate over "whether Ethereum is a security" has previously hindered decisions on its spot ETF. 👉 Explore more on regulatory developments
The Crucial Week for Ethereum ETF Decisions
This week marks a critical deadline for the SEC's decision on spot Ethereum ETFs. For an ETF to launch, the SEC must approve both the 19b-4 (exchange rule change) and the S-1 (registration statement) filings. The regulator must decide on VanEck's application by May 23rd, with final deadlines for ARK 21Shares and Hashdex falling on May 24th and May 30th, respectively.
Nate Geraci, President of ETF Store, noted, "Technically, the SEC could approve the 19b-4s and then slow-walk the S-1 approvals (especially given the lack of engagement)." Subsequently, on May 21st, Bloomberg Senior ETF Analyst Eric Balchunas increased the probability of a spot Ethereum ETF approval to 75%, up from a previous 25%. He cited rumors of a potential "180-degree turn" by the SEC on the increasingly politicalized issue, causing a frantic reassessment across the industry.
Following this, CoinDesk reported that the U.S. SEC has asked exchanges to expedite updates to their 19b-4 filings for spot Ethereum ETFs. This suggests a potential reversal in the SEC's stance, and the market has responded rapidly to this series of positive developments.
Has the Bull Market Truly Returned?
On May 20th, 10x Research highlighted that Bitcoin's price action had improved significantly since the previous week. The price rebounded into a key resistance zone from late April ($67,500), surpassed the early May high ($64,000), and a break above $67,500 could potentially set a new all-time high. The $68,300 level, often viewed as a bull-bear dividing line, became a focal point again, as a technical breakout there could trigger a powerful upward move.
With Bitcoin now above $70,000, Ki Young Ju, founder and CEO of CryptoQuant, stated on social media, "Bitcoin is in the middle of a bull cycle. Its market cap is growing faster than the realized cap, a trend that typically lasts about two years. If this pattern continues, the bull cycle might conclude around April 2025."
Adding a macro perspective, BitMEX founder Arthur Hayes recently argued that to counter Yen depreciation, the Fed might enter an unlimited dollar-Yen swap agreement with the Bank of Japan. Hayes views this as equivalent to the Fed implementing yield curve control, which would lead to a significant devaluation of the U.S. dollar.
In his view, a weaker dollar implies a sharp rise in global dollar liquidity, which would be highly beneficial for cryptocurrency markets, led by Bitcoin. He predicts that if the U.S. and Japanese central banks enact this "simple and brutal" monetary swap policy, it could ignite a new wave of crypto buying, potentially pushing Bitcoin toward the $1 million mark and setting new historical highs.
Hayes advises traders to closely monitor the USD/JPY exchange rate and consider increasing their crypto allocations. He emphasizes that the onset of large-scale and expanding swap arrangements could signal the imminent arrival of a crypto bull market.
While Ethereum's price trajectory has been contentious, some analysts speculate that a Bitcoin bull run could propel ETH toward $10,000. With the positive factor of BlackRock launching a tokenized treasury fund, the approval—or denial—of an Ethereum ETF is now poised to significantly influence the next potential "Ethereum bull run."
Frequently Asked Questions
What caused Ethereum's price to surge over 20%?
The primary catalyst was increased speculation and reporting that the U.S. SEC might reverse its stance and approve a spot Ethereum ETF, following rumors and a request for exchanges to expedite their filings.
How does a spot Ethereum ETF differ from a Bitcoin ETF?
A spot Ethereum ETF would track the actual price of Ether (ETH) and hold the underlying asset. The core regulatory debate has hinged on whether Ethereum is classified as a security or a commodity, a hurdle that was less pronounced for Bitcoin.
What are the key dates for the Ethereum ETF decisions?
The SEC must decide on VanEck's application by May 23rd. Deadlines for ARK 21Shares and Hashdex are May 24th and May 30th, respectively. Approval requires both a 19b-4 and an S-1 filing to be signed off.
Could political factors influence the SEC's decision on an Ethereum ETF?
Yes, the increasing politicalization of cryptocurrency, with both parties engaging with the industry, is seen as a potential factor that could sway regulatory decisions in a more favorable direction.
What is the significance of the $68,300 level for Bitcoin?
This level is often technically viewed as a major bull-bear demarcation line. A sustained break above it has historically been associated with strong bullish momentum and potential new highs.
What happens if the Ethereum ETF is not approved?
A rejection could lead to a short-term negative price reaction for Ethereum and related tokens. However, long-term fundamentals, such as network upgrades and adoption, would likely remain the primary drivers of value. 👉 Get advanced market analysis strategies