Ether ETF approval, rates decline spurred crypto recovery  

A Nansen analyst shared his predictions for the recent crypto market rally that wiped out almost $300 million in short positions and contributed to a significant recovery in prices.

As previously reported on May 21, the overall cryptocurrency market cap increased by hundreds of billions within hours. This rapid rise was followed by increasing demand for Bitcoin (BTC); 11 US spot BTC ETFs saw outflows of over $950 million.

According to the Nansen analyst, the approval of spot Ethereum (ETH) ETFs was a key factor that unexpectedly boosted market sentiment.

“The ETH ETF approval was fully priced in and surprised markets on the upside,” the analyst said.

Many issuers have updated their 19b-4 filings proposing rule changes. Reports also indicate that the US SEC is contacting providers regarding securities registration statements through S-1s following initial approvals. Despite this progress, the process may be gradual.

The analyst emphasized that beyond on-chain performance and Wall Street crypto adoption, macroeconomic conditions are improving. Short-term US interest rates reportedly fell 40 basis points in 30 days as the Federal Reserve took action to control inflation.

Additionally, Nansen’s risk management indicators switched to “risk open” sometime between May 18 and May 19, signaling higher token levels. “For now, it looks like we are bullish on crypto prices,” the analyst said.

At the time of writing, market prices had stabilized after a two-day surge that pushed BTC above $70,000 and ETH north of $3,700. According to CoinGecko, the total crypto market value hovers around $2.7 trillion, while transaction volumes have halved compared to the previous day.

Crypto market overview | Source: CoinGecko