• SEC’s approval of spot Ethereum ETFs lifts digital currencies

• With sector-specific risks out of the way, focus turns on interest rates

• What could be the next growth lever in cryptos?

Cryptos go mainstream

Last Thursday, the US Securities and Exchange Commission (SEC) greenlighted eight applications for spot Ether ETFs albeit they will begin trading in at least two or three months from now. Digital assets had been rallying hard in the days preceding the decision as speculators tried to frontrun the SEC’s potential approval, but interestingly we have not yet seen a sell-the-fact type of reaction.

Undoubtedly, this landmark event seals cryptos’ integration to traditional finance as the two leading cryptocurrencies will now be mostly traded through investment vehicles controlled by Wall Street giants. The whole idea behind the cryptocurrencies’ edge due to their decentralised nature seems to be fading in favor of institutional adoption.

For Bitcoin, the launch of spot ETFs could be considered a success both for the volume of inflows and the price’s rally to a fresh all-time high. Considering that Ethereum has not yet approached its previous cycle peaks, there seems to be more upside potential in case its spot ETFs live up to expectations. However, it is highly uncertain that Ethereum will follow Bitcoin’s fate as institutional demand for crypto exposure might have already been largely exhausted.

What’s next?

As the launch of spot ETFs and important upgrades like Bitcoin halving or Ethereum’s Dencun are now behind us, it seems that there is almost nothing positive left for crypto investors to price in. The introduction of ETFs in smaller cap coins is both highly unlikely and insufficient to attract additional inflows as the overall investment demand for cryptos will most likely be absorbed by the ETFs of the two most prominent coins.

Meanwhile, although cryptos are slowly transitioning to a more mature phase, their positive correlation with risk-sensitive assets remains in place. Therefore, all attention will now shift to the Fed’s interest rate trajectory, which will be largely dictated by how quickly inflation comes under control.

Bitcoin consolidates after advance pauses

BTCUSD has been in a recovery mode following its bounce off the May low of $56,480, violating the 50-day simple moving average (SMA) and trading within breathing distance from its all-time high. However, the rebound seems to be on hold in the past few sessions as the bulls appear to have lifted their foot off the gas.

Should buying pressures re-emerge, the price could revisit the recent resistance of $71,960 ahead of the record high of $73,800.

On the flipside, if the recent consolidation is followed by a move to the downside, the king of cryptos could initially challenge the recent support of $67,000. Further retreats could then cease at the April support of $64,500, which overlaps with the 50-day SMA.