Bitcoin (BTC) surged past the $70,000 mark on May 21, marking a significant milestone driven by a flood of investment into spot Bitcoin exchange-traded funds (ETFs) and a broader market rally.

Bitcoin’s price climbed to $70,325, a 6% increase over 24 hours, before settling at $68,700 as of press time, based on CryptoSlate data.

Ethereum (ETH) arguably led the rally over the past couple of hours — experiencing a staggering 14.5% rise within an hour on Monday amid speculation that the US SEC might approve spot Ethereum ETFs.

ETH climbed from $3,143 to $3,518 as of press time.

Renewed interest

The renewed interest in Bitcoin ETFs follows weeks of outflows, with nearly $1 billion flowing into these funds, providing investors with exposure to the leading digital asset.

The surge has led to significant liquidations in the market, with over $235 million in positions closed in the past 24 hours, including $63 million in Bitcoin short positions alone, according to CoinGlass.

Analysts indicate that most on-chain metrics suggest the beginning of a bull market despite some showing signs of potential peaking. The recent bounce near $60,000 has sparked renewed interest, with Farside Investors reporting approximately $950 million in inflows last week, a level not seen since March.

Bitcoin’s 51% year-to-date gain reflects investors’ anticipation of US monetary expansion, evidenced by the M2 monetary base surpassing $21 trillion in April 2024. This increase in circulating money suggests rising inflationary pressures despite a period of company and individual spending hesitancy.

Meanwhile, the Federal Reserve’s efforts to manage inflation and avoid a recession could affect liquidity and the attractiveness of assets like Bitcoin.

Scarcity

Bitcoin reached a new all-time high of $73,737 in March and is now just 5% below that level. The recent run appears to be largely driven by the new Bitcoin ETFs, which trade on traditional stock exchanges and allow investors to buy shares that track the price of the asset.

Supporting the bullish sentiment, Bitcoin reserves on major exchanges have dropped to a seven-year low. Data from CryptoQuant shows only 1,918,417 BTC available on major trading platforms as of May 19, a significant decrease from the previous year.

This scarcity, coupled with the recent halving event that reduced the potential new supply from miners, makes a bearish outlook on Bitcoin increasingly difficult to justify.

The crypto community continues to watch closely as Bitcoin’s price action unfolds, with many wondering whether the digital asset will continue its ascent or face a significant correction in the coming weeks.

Mentioned in this article