The approval of Spot Ethereum ETFs has significantly boosted Bitcoin’s price. This development could catalyze Bitcoin’s growth in the medium and long term. So Why is Bitcoin Going Up?
Why is Bitcoin Going Up?
According to CoinMarketCap data, Bitcoin experienced a significant surge on May 26, reaching $68,900 per BTC, its highest level in over a week. Bitcoin saw a 6% increase, pushing its market capitalization above $1.4 trillion once again.
It’s not just Bitcoin that has increased in price, over the past 24 hours, several other cryptocurrencies also saw notable recoveries. Ethereum jumped by 19%, Solana by 6%, Dogecoin by 8%, Cardano by 7%, and XRP by 4%.
CoinDesk reports that the market’s upward trend follows the U.S. Securities and Exchange Commission (SEC) officially approving eight Ethereum spot ETFs. This marks a significant shift in just a few days.
Specifically, the SEC approved Ethereum spot ETF proposals from Grayscale and Bitwise for trading on the NYSE, iShares (BlackRock) on the Nasdaq, and VanEck, ARK/21Shares, Invesco, Fidelity, and Franklin Templeton on the Cboe BZX.
Moreover, the SEC’s announcement recognized Ethereum ETFs as commodity-based exchange-traded funds. This indirectly challenges the previous stance that ETH could be considered a security, which the commission had threatened in recent months.
This approval and recognition have significantly boosted market confidence, contributing to the surge in Bitcoin and other cryptocurrencies.
Why did Bitcoin Increase in Price after Ethereum’s Historic Event?
The rise in Bitcoin’s price following the SEC’s announcement of the approval of all Ethereum spot ETF proposals can be attributed to several interconnected factors:
- Positive Market Sentiment: Approval of Ethereum spot ETFs signals regulatory acceptance and validation of cryptocurrency-based investment products. This positive sentiment can extend to the broader cryptocurrency market, including Bitcoin, boosting investor confidence and leading to price increases.
- Increased Institutional Interest: With Ethereum spot ETFs being approved, institutional investors may view this as a green light for further involvement in the cryptocurrency market. Bitcoin, being the largest and most well-known cryptocurrency, often benefits from increased institutional interest and investment flows.
- Market Correlation: Cryptocurrencies often exhibit correlated price movements. When Ethereum experiences positive news and price increases, other major cryptocurrencies like Bitcoin tend to rise as well due to the overall uplift in market sentiment and investor enthusiasm.
- Speculative Trading: Traders might anticipate that the approval of Ethereum ETFs could pave the way for future Bitcoin ETF approvals or other favorable regulatory decisions. This speculation can drive up the price of Bitcoin as traders position themselves to benefit from potential upcoming developments.
- Diversification and Portfolio Rebalancing: Investors might rebalance their portfolios to include more Bitcoin in anticipation of increased market activity and liquidity stemming from the new Ethereum ETFs. This rebalancing can create additional demand for Bitcoin, pushing its price higher.
The Bottom Line
Here are all the answers to why Bitcoin is going up. Although Bitcoin’s rise isn’t strong, it remains a positive signal for the cryptocurrency in the upcoming period. This optimistic outlook extends to other cryptocurrencies like Ethereum, Cardano, and Polkadot.
