Bitcoin Bulls Reignite Rally, Spot ETF Inflows Stabilize as Ethereum Spot ETF Looms

Bitcoin Bulls Reignite Rally, Spot ETF Inflows Stabilize as Ethereum Spot ETF LoomsBitcoin (BTC) rebounded strongly in early trading on Monday, breaking through $63,750 and kicking off the shortened trading week in the US, setting the stage for the upcoming July 4th holiday. BTC had previously dipped to a low of $59,881 last week, but rallied 6

Bitcoin Bulls Reignite Rally, Spot ETF Inflows Stabilize as Ethereum Spot ETF Looms

Bitcoin (BTC) rebounded strongly in early trading on Monday, breaking through $63,750 and kicking off the shortened trading week in the US, setting the stage for the upcoming July 4th holiday. BTC had previously dipped to a low of $59,881 last week, but rallied 6.5% over the next three days. Bulls are currently aiming to establish a foothold above $63,000, laying the groundwork for the next leg up.

Spot Bitcoin ETF Inflows Continue, But Remain Below Previous Levels

Alongside the resurgence in Bitcoins bullish momentum, inflows into spot Bitcoin exchange-traded funds (ETFs) have begun to pick up. Data from provider Farside Investors shows that Bitcoin ETFs have seen four consecutive days of inflows, although they remain below previous levels. Bitcoin ETFs saw a total of $137.2 million in asset under management (AUM) added between Tuesday and Friday, but this falls short of the $174.5 million outflow recorded on Monday.

According to the latest Digital Asset Fund Flows report by CoinShares, digital asset investment products experienced outflows for the third consecutive week, totaling $30 million, with outflows being particularly pronounced last week. CoinShares Head of Research stated that most providers saw smaller inflows, a decline compared to previous weeks, although this was offset by an outflow of $153 million at Grayscale. Weekly trading volume rose 43% week-on-week to $6.2 billion, but remains well below the year-to-date average of $14.2 billion per week.

Ethereum ETF Outflows Hit Record Levels, Signaling Potential Shift in Sentiment

By geographic region, the US saw inflows of $43 million, while Brazil and Australia saw inflows of $7.6 million and $3 million, respectively. Germany, Hong Kong, Canada, and Switzerland, on the other hand, experienced negative sentiment, posting outflows of $29 million, $23 million, $14 million, and $13 million, respectively.

While Bitcoin's inflows have begun to stabilize, Ethereum (ETH) has seen outflows totaling $61 million, the highest outflows since August 2022. Ethereum has seen a total of $119 million in outflows over the past two weeks, making it the worst-performing asset in terms of net flows year-to-date.

On the other hand, Multi-Asset and Bitcoin ETPs led with $18 million and $10 million in inflows, respectively. Last week, short Bitcoin outflows also increased by $4.2 million, suggesting a potential shift in market sentiment.

Solana and Litecoin See Notable Inflows, But Overall Blockchain Stocks Experience Outflows

A number of altcoins also saw inflows, most notably Solana ($1.6 million) and Litecoin ($1.4 million). Despite the positive year-to-date sentiment toward cryptocurrencies, blockchain stocks have experienced outflows of $545 million this year, representing 19% of AUM.

Ethereum Spot ETF Nears Launch, Captivating Market Attention

ETF flows are now a major focal point for cryptocurrency investors looking to gauge the health and interest level in the cryptocurrency market, and are the most significant catalyst besides the imminent launch of the spot Ethereum ETF, which could officially go live as early as Wednesday.

Fineqia International research analysts note that the weekly BTC spot ETF flows were neutral, with $37 million in outflows. The net outflows were concentrated entirely on Monday, with approximately $175 million, followed by slight positive flows over the next four days, breaking a record of seven consecutive trading days of net outflows. The total inflows since inception currently stand at $14.5 billion, with cumulative trading volumes surpassing $300 billion, reaching approximately $311.8 billion.

The analyst points out that the significant impact of the BTC spot ETF on the digital asset market is evident in the distribution of trading volume this week. From January to June 2024, weekend trading volume accounted for only 16% of total trading volume, the lowest percentage ever recorded for this period (the first half of the year). This indicates increased activity from traditional finance investors, with trading volume concentrated from Monday to Friday, particularly strong during US market hours, and declining after the US stock market closes.

Ethereum Spot ETF Launch to Mark a Significant Milestone

Meanwhile, ETF issuers continue to engage with regulators regarding the launch of an Ethereum spot ETF. Rumors suggest a possible launch of the ETH Spot ETF in the first week of July, but recent requests from the Securities and Exchange Commission for the S-1 filing to be amended and resubmitted by July 8 could push back a potential approval to mid-July onwards.

Analysts add that Gary Gensler previously stated that trading could potentially begin as late as September, but market participants predict a faster timeline, with trading commencing within a few weeks.

Solana Spot ETF Application Filed, Signaling Growing Traditional Finance Interest in Digital Assets

The launch of the Bitcoin ETF and the impending launch of the Ethereum ETF have made issuers eager to secure approval for other cryptocurrency products, with several firms setting their sights on bringing a Solana ETF to the US market.

Two prominent issuers, VanEck and 21Shares, have already filed for a Solana (SOL) Spot ETF, signaling the increasing adoption of digital assets by traditional finance. VanEck claims that SOL is a commodity, similar to BTC and ETH, a stark contrast to the SECs stance last year, which classified various digital assets, including SOL, as potential securities. Furthermore, the lack of a futures market for SOL in the US further raises questions regarding liquidity and market fairness, potentially slowing the approval process.

Digital Asset Market Outlook Remains Positive, Highlighted by Increased Traditional Finance Involvement

Despite these challenges, the approval and launch of the BTC Spot ETF, the expected launch of the ETH Spot ETF, and the recent filing for the SOL Spot ETF highlight the growing interest and adoption of digital assets by traditional financial service providers and investors.

This trend signifies a positive outlook for the digital asset market in the medium to long term, with increased market structure building while inflows, liquidity, and transparency also increase concurrently.

Summary

Bitcoin bulls reignited their rally, with spot Bitcoin ETF inflows continuing but remaining below previous levels. Ethereum spot ETF outflows hit record levels, signaling a potential shift in sentiment. Solana and Litecoin saw notable inflows, but overall blockchain stocks experienced outflows. The imminent launch of the spot Ethereum ETF is captivating market attention. A Solana spot ETF application has been filed, further signifying growing traditional finance interest in digital assets. The digital asset market outlook remains positive, highlighted by increased traditional finance involvement.

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