Bitcoin‘s price experienced a slight decline on Thursday as a recent surge in cryptocurrency markets, fueled by optimism over a potential spot Ether exchange-traded fund (ETF), was overshadowed by renewed concerns about high U.S. interest rates.
U.S. Rate Jitters Impact Crypto Market
Overnight gains in the U.S. dollar, driven by fears of sustained high interest rates, exerted pressure on cryptocurrency prices. Bitcoin dipped 0.35% over the past 24 hours, reaching $69,390 by 09:05 ET (13:05 GMT). The world’s largest cryptocurrency settled back into its typical trading range from the past two months following a brief rally earlier this week.
Ether Holds Gains Amid ETF Speculation
Ether, the world’s second-largest cryptocurrency, hovered near two-month highs achieved earlier this week, retaining most of its recent gains. The anticipation of a spot Ether ETF approval for U.S. markets has driven this excitement. The Securities and Exchange Commission (SEC) is expected to make a decision on the matter by Thursday or Friday.
Spot Ether ETF Dominates Market Focus
Ether saw a 5.5% increase over the past 24 hours, reaching $3,878.84. This rally followed reports that the SEC had requested certain exchanges to refine their filings for spot Ether ETFs, signaling progress towards potential approval. However, approval is not guaranteed.
The SEC is set to decide on applications for a spot Ether ETF from VanEck, ARK Investment Management, and seven other issuers by the end of the week. According to QCP Capital, the approval of spot Ether ETFs in the U.S. could drive a 60% rally in Ether over the coming months, similar to the market reaction seen after the approval of spot Bitcoin ETFs in January. Bitcoin surged from $42,000 to over $73,000 within two weeks following the ETFs’ launch, according to CoinGecko data.
“With Friday implied volatility above 100%, the market is expecting fireworks,” QCP stated. “VanEck’s ETF has been listed by the DTCC. We think approval is now highly likely with trading expected as early as next week.”
Implied volatility reflects the market’s expectation of future price fluctuations for a financial instrument.
Rate Concerns Weigh on Crypto Prices
Broader cryptocurrency markets have relinquished much of the gains made earlier this week as fears of prolonged high U.S. interest rates intensified following hawkish signals from the Federal Reserve. Minutes from the Fed’s late-April meeting revealed growing concerns among policymakers about persistent inflation, with some members indicating a willingness to hike rates to combat inflation.
Several Fed officials also cautioned this week that the bank had little confidence that inflation was steadily declining towards its 2% annual target. While another rate hike seems unlikely, persistent inflation could delay the Fed’s plans to start cutting rates. Prolonged high rates are detrimental to crypto markets, which typically thrive in low-rate, high-liquidity environments.
Altcoin Prices Fall
Altcoin prices mostly declined on Thursday. SOL dropped 2.5%, and XRP lost 1%. Among meme tokens, SHIB fell 0.5%, while DOGE edged up 0.3%.
