May 27 The ETH ETF is great news, but will many people buy it?
On Bitfinex Alpha
The market remained resilient last week as Bitcoin held above the critical $62,000 level, helped by the unexpected approval of the Ether Spot ETF. Early last week, both BTC and ETH soared in anticipation of the imminent announcement, but fell immediately after the news was confirmed.
While it is certainly positive for the industry as a whole that there are now additional regulatory avenues available to access crypto assets, the SEC has made it clear that in the case of ETH, ETFs seeking to distribute to investors will not be approved. ETH staking rewards. This could then encourage more investors to invest directly in ETH itself, allowing them to freely stake their assets and earn additional returns. This suggests that enthusiasm for the ETH ETF may not be as great as for the BTC ETF to date.
In fact, as of May 24, the BTC ETF has achieved a record 10 consecutive days of inflows, with BlackRock’s IBIT leading the way with $16.35 billion. Additionally, a notable indicator is that last week’s surge in ETH price was driven by increased activity in the perpetual futures market. The $4,000 resistance level still remains a major psychological barrier, and breaking it is likely to signal a strong uptrend, although near-term volatility and consolidation are expected.
The state of the BTC and ETH markets is well explained by the BTC and ETH implied volatility indices. Now we see intense speculation and significant market volatility building around perceived risk events such as the Bitcoin halving, the last FOMC meeting and the approval of the ETH ETF, but then returning to stable prices at an almost equally rapid rate, with implied volatility and You can see a decreasing pattern. When an event ends, a volatility risk premium accrues.
On the broader economic front, two key figures at the Federal Reserve last week offered important insight into how they view the current economic situation, reiterating their firm commitment to lowering inflation to their 2% target. Although resilient labor markets have strengthened overall economic activity, persistent inflation and financial stability remain key areas of focus for policymakers.
In particular, the U.S. housing market continues to experience difficulties as existing home sales unexpectedly decreased in April due to rising mortgage interest rates and high housing prices. This marks the second consecutive month of declining sales and reflects declining confidence in construction companies. High mortgage rates have had a major impact on the housing market, and significant relief is unlikely until the Federal Reserve cuts rates.
U.S. business activity also jumped to its highest level in more than two years in May, driven by strong growth in the services sector. However, manufacturers are reporting rising prices for a variety of inputs, indicating potential future price inflation.
To recap the cryptocurrency news, the biggest development of the past week was, of course, the SEC’s approval of the ETH ETF, which represents a significant win for companies like VanEck, Fidelity, and BlackRock, and a significant step forward for the broader cryptocurrency industry.
Meanwhile, the U.S. House of Representatives approved the CBDC Surveillance Prevention Act by a vote of 216 to 192. The bill aims to prevent the Federal Reserve from issuing CBDCs to individuals, but critics argue it could weaken the global dominance of the U.S. dollar and U.S. banks.
And as if on cue, US presidential candidate Donald Trump began accepting cryptocurrency donations, positioning himself as a “crypto candidate” in stark contrast to the Biden administration’s more cautious stance on cryptocurrencies.
Have a great trading week!