The cryptocurrency market was up today as Bitcoin (BTC), Ether (ETH), Cardano (ADA) and a host of altcoins rallied after several large institutions followed BlackRock’s lead in filing for a Bitcoin ETF in the US.

The bitcoin price hit $30,000 for the first time since April 18, and it is also up 36% year-over-year since June 2022, when China warned that BTC was about to drop to zero.

The rally sparked a wave of short liquidations across the market, totaling more than $173 million in 24 hours on June 21. The rise in cryptocurrency prices helped narrow the appreciation gap between stocks and the cryptocurrency market, which widened after the Federal Reserve paused in raising interest rates. hike.

Total cryptocurrency liquidations in 1 day. Source: Coinglass

While today’s rally has gained momentum, its duration is in doubt as investors anticipate further regulatory action from the SEC. The lack of bipartisan support for cryptocurrency regulation means that the U.S. Congress is unlikely to pass any major legislation, meaning many cryptocurrencies could be classified as securities by the SEC.

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Let’s take a look at the three main factors influencing the strength of the cryptocurrency market on the day.

Bitcoin ETF Hot Discussion

Speculation about the possible approval of the first U.S. bitcoin ETF helped cryptocurrency market prices rebound. The speculation intensified after BlackRock, the world’s largest asset manager, filed with the U.S. Securities and Exchange Commission (SEC) for a bitcoin spot ETF on June 16.

Notably, BlackRock, an investment firm with $9.5 trillion in assets under management, has applied for 576 ETFs and faced only one rejection. Market analyst Lark Davis predicted that SEC approval could allow asset managers to buy all bitcoin available on cryptocurrency exchanges.Davis issued a statement in the document noticed:

“Only about 10% of Bitcoin ($50 billion worth) exists on exchanges. 0.5% of BlackRock’s money flowing into BTC can buy all available Bitcoin.”

Still, the SEC rejected all bitcoin ETF applications, including those from asset managers such as VanEck, Ark Invest, and Bitwise. WisdomTree is the latest investment firm to file a new spot bitcoin ETF application, which has been rejected twice by the SEC. The first rejection will occur in December 2021 and the second in October 2022. WisdomTree is a New York-based asset management fund with approximately $83 billion in assets under management. Another well-known asset management fund, Invescorelaunched applications for a Bitcoin ETF on the Cboe exchange.

Bullish cryptocurrency market sentiment is on the rise

While Bitcoin and altcoins still have risk events that could affect prices, Bitcoin futures show traders shifting from bearish to bullish. According to Coinglass, 54.24% of traders are long Bitcoin, compared to a ratio of 1.2 short BTC.

Bitcoin longs to shorts ratio. Source: Coinglass

Coupled with reduced spot trading volumes and net outflows of Bitcoin from exchanges, further price volatility is likely. Typically, when there are more net outflows of bitcoin from exchanges, selling pressure decreases, allowing short liquidations to have a greater impact on bitcoin prices.

Bitcoin net trading position change. Source: Glassnode

Fed pauses rate hikes, adding to risk appetite

On June 14, Federal Reserve Chairman Jerome Powell revealed at the Federal Open Market Committee (FOMC) that the central bank will suspend raising interest rates in June. While the move was in line with investors’ expectations, the cryptocurrency market initially did not match the bullish momentum in stocks.

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While bitcoin and ethereum prices have been impacted by recent negative enforcement news, today’s rally shows a glimmer of bullish momentum. The Bitcoin Fear and Greed Index has hit a three-month high, underscoring investors’ preference for risk-on assets.

Bitcoin Fear and Greed Index. Source: Alternative.me

Overall, the cryptocurrency market is likely to continue to see price volatility driven by macro events. While positive news of BlackRock ETF filings and renewed institutional interest provides good short-term gains for cryptocurrency prices, the market’s reaction to any potential enforcement action or recession will be the real determining factor in which direction the market chooses to take.