Cryptocurrency prices and related stocks reversed to pare gains Tuesday. Cryptos had rallied early Tuesday following reports that spot ethereum exchange traded funds could clear a major step for approval with the Securities and Exchange Commission this week. Elsewhere, the price of bitcoin eased after briefly spiking back above $71,000. The top crypto could test its record highs this week, one analyst says.
Ethereum rallied above $3,800 early Tuesday after Monday reports that the Securities and Exchange Commission may reverse its stance on approving spot ethereum ETFs.
Nine issuers, including VanEck and ARK Investment Management, have filed with the SEC to list spot ethereum ETFs. Meanwhile, the SEC has asked exchanges to update their 19b-4 filings on an accelerated basis, CoinDesk reported Monday citing unnamed sources.
Both the 19b-4 forms and S-1 registration statements must both be approved for ETFs to launch. The spot bitcoin ETFs that launched in January followed a similar process.
Expectations For Ethereum Approval
As the bitcoin price spiked, Bloomberg ETF analysts Eric Balchunas and James Seyffart on Monday increased their odds the SEC will approve VanEck's spot ethereum application to 75% from 25%. The SEC is due to approve or deny the first round of 19b-4s this week. The agency's votes on VanEck and ARK's filings are expected Wednesday and Thursday, respectively.
"Hearing chatter this afternoon that SEC could be doing a 180 on this (increasingly political issue)," Balchunas posted on social media platform X. "So now everyone scrambling (like us everyone else assumed they'd be denied).
"We also need S-1 approvals," Seyffart said online. He noted that it could be weeks to months before S-1 filings are actually approved.
"That said, if we're correct and see these theoretical approvals later this week. It should mean that S-1 approvals are a matter of 'when' not 'if'," Seyffart added.
Ethereum traded around $3,740 late Monday, marking a gain of more than 9% over the previous 24 hours. Ethereum is trending back toward its 52-week high of $4,092 reached on March 12. But it remains well below its November 2021 peak above $4,800. The No. 2 crypto soared more than 63% in 2024.
Bitcoin Price Reverses From $72,000
Elsewhere, bitcoin pared gains after trending back near $72,000 early Tuesday on a wave of institutional spot bitcoin ETF inflows last week.
More than 600 investment firms last week revealed significant spot bitcoin ETF holdings, CoinTelegraph reported Thursday. The list included major banks and hedge funds, such as Morgan Stanley, JPMorgan Chase, Wells Fargo and UBS. The group collectively owns $3.5 billion worth of bitcoin ETFs.
Spot bitcoin ETFs on Monday recorded $237.2 million in inflows, according to U.K.-based Farside Investors. That marked six consecutive days of inflows, adding to the $948.3 million that the bitcoin ETFs recorded last week.
FXPro senior market analyst Alex Kuptsikevich believes the surge in inflows and institutional demand could propel bitcoin to test its record highs near $74,000 this week, CoinDesk reported Friday.
"If cryptocurrencies get support from the global risk appetite on Friday, (the bitcoin price) could exceed $70,000 over the weekend," Kuptsikevich wrote. "A test of the $71K-$74K highs area, in our view, could happen as early as early next week, triggering a new episode of FOMO (fear of missing out)."
Bitcoin traded around $69,600 late Tuesday after climbing as high as $71,935 in the morning. The top crypto is now not too far off its March 14 record high of $73,798. Bitcoin vaulted about 66% so far this year.
Crypto Prices And Stock Action
Coinbase ticked a fraction higher Tuesday, adding to its 8.5% leap on Monday. Shares surged 3.3% premarket Tuesday. Coinbase stock is working on a rebound back above its 50-day moving average. Shares gained 29.8% in 2024.
The spot bitcoin ETFs, including BlackRock's iShares Bitcoin Trust and ARK 21Shares Bitcoin ETF, collectively fell around 1.3% Tuesday to erase their morning gains. The bitcoin ETFs jumped around 4.5% Monday and are trending back to mid-March highs.
Robinhood rose a fraction Tuesday after swinging more than 2% higher premarket. Robinhood stock broke out on Monday above a 20.55 buy point for a cup base. Robinhood shares have bolted 64.5% thus far in 2024.
MicroStrategy, which holds about $13 billion of bitcoin, retreated 4.2% Tuesday. Shares advanced 1.8% premarket. MicroStrategy stock rallied 9% Monday. Shares of the software company rallied more than 34.2% last week following Tuesday reports from Bloomberg that MicroStrategy stock will join the MSCI World Index at the end of the month. MSCI made the decision based on market value following a review of its indexes. The change will take effect after market close on May 31.
While the price of bitcoin is rising, MicroStrategy soared 162% year to date.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
