Bitcoin (BTC) experienced a significant surge on Tuesday, climbing above $71,000 for the first time since early April. The cryptocurrency's rally was fueled by speculation surrounding the potential approval of a spot ether exchange-traded fund (ETF) in the United States. Ether (ETH) also saw substantial gains, rising over 19% to $3,700. This surge in prices led to over $260 million in market-wide short liquidations, marking the largest liquidation event since February.
The spike in Bitcoin and Ether prices was prompted by Bloomberg analysts Eric Balchunas and James Seyffart raising the probability of a spot ether ETF being approved by the U.S. Securities and Exchange Commission (SEC) to 75%. This optimism was further supported by reports from CoinDesk that the SEC had asked exchanges aspiring to list ether ETFs to update their 19b-4 filings ahead of a crucial deadline this week.
"Markets started to rally late Monday as Bloomberg analysts raised the odds of a spot ether ETF to 75% from the early 20%," noted the analysts. "Exchanges are being asked to update 19b-4 filings on an accelerated basis, suggesting approval is imminent."
The potential approval of a spot ether ETF is seen as a bullish event by market participants, as it could open the floodgates to institutional capital. The spot bitcoin ETF, which began trading in January, has accumulated $12 billion in total inflows, with top trading firms and state funds among its holders. The approval of a similar ETF for ether could further boost institutional investment in the cryptocurrency market.
Rajagopal Menon, VP at WazirX, commented on the recent developments, saying, "The crypto market is surging as investors react to a torrent of good news. ETH has skyrocketed 19% in 24 hours to surpass $3,700, while Bitcoin has crossed $71,000, up nearly 8%. The catalyst for this surge appears to be the ETF approval, with chatter suggesting the SEC could be doing a 180 on this increasingly polarizing issue."
The broader cryptocurrency market also saw notable gains. According to CoinGecko data, XRP, Cardano's ADA, Solana's SOL, and Dogecoin (DOGE) rose between 3-6%. The global cryptocurrency market cap jumped by 7.9% to approximately $2.61 trillion in the past 24 hours.
In terms of liquidations, Binance logged over $130 million, the largest among its counterparts, followed by OKX at $118 million and Huobi at $51 million. Coinglass data showed that Ether shorts lost over $115 million, while Bitcoin shorts saw losses just over $99 million.
The recent rally in Bitcoin and Ether was also driven by broader market dynamics, including growing expectations of a U.S. interest rate cut later this year. Softer U.S. inflation readings for April have ramped up hopes that the Federal Reserve might begin trimming rates as soon as September.
"Spot Ethereum ETF approval odds have surged to 75% from 25%, as the SEC asks exchanges to update 19B-4 filings on an accelerated basis for Spot Ethereum ETFs," said Avinash Shekhar, Co-founder and CEO of Pi42. "This is huge news for the future of Ethereum, indicating it may soon follow in the footsteps of Bitcoin. Owing to this, the market is witnessing significant movement and is expected to gain further traction."
The surge in Bitcoin's market capitalization to $1.402 trillion highlights its dominance in the cryptocurrency space, now standing at 53.79%, according to CoinMarketCap. Additionally, Bitcoin's trading volume in the last 24 hours saw a significant uptick, soaring by 135% to reach $52.07 billion.
