The altcoin market is booming. Buoyed by a sudden rise in value and the declining dominance of Bitcoin, altcoins have seen a ferocious rise. The total altcoin market capitalization has soared 15% in just two weeks, reaching a staggering $1,156 billion. But what is causing this extraordinary surge? Let's find out.
Bitcoin ETFs drive market growth
In a historic milestone for the cryptocurrency market, U.S. Bitcoin ETFs have seen inflows of more than $2 billion in the past two weeks, with a record $1 billion flowing in last week and $305 million on May 21 alone. Bitcoin ETFs, which track the price of Bitcoin and trade on traditional exchanges like the New York Stock Exchange, offer investors exposure to Bitcoin without having to hold the cryptocurrency directly.
According to data from Farside, US spot Bitcoin ETFs recorded net inflows of approximately $252 million on May 24, marking their 10th consecutive trading day of net inflows. Specifically, BlackRock's IBIT saw inflows of $182 million, Fidelity's FBTC saw inflows of $44 million, Bitwise's BITB saw inflows of $6.4 million, and ARK 21Shares Bitcoin ETF saw inflows of $4 million.
Analyst Insights: Lark Davis' Bold Predictions
In a post on X, crypto influencer Lark Davis predicted a significant price surge for Bitcoin and Ethereum, with Bitcoin hitting $150,000 and Ethereum hitting $15,000. Davis attributes this trend to the growing influence of the Bitcoin ETF, which is already attracting hundreds of millions of dollars in inflows per day, and expects to see a similar trend with the soon-to-be-launched Ethereum ETF.
According to a report from analysts at Kaiko, Grayscale could be a game-changer for ETH ETFs as well as BTC ETFs. Grayscale's upcoming spot Ether (ETH) ETF is expected to see outflows of around $110 million per day if it follows the same trend seen when Grayscale Bitcoin Trust (GBTC) converted to an ETF. After converting on January 11, GBTC experienced a 23% outflow of assets in the first month, amounting to $6.5 billion.
Davis expects retail investors, institutional investors, asset managers, pension funds and countries to invest billions of dollars into these ETFs every day when the bull market peaks. Capital inflows are predicted to drive up prices. He said ETF-led investments will drive up Bitcoin and Ethereum prices because market sentiment is not bullish given the growth potential.
Interestingly, the Q1 report revealed that over 20% of exposure to US spot Bitcoin ETFs was held by large and institutional investors with assets over $100 million. This included large hedge funds, banks, and even the state of Wisconsin pension fund, highlighting the growing institutional interest in Bitcoin ETFs and a sign that ETH ETFs may suffer a similar fate.
Although the ETH ETF has yet to launch, it is speculated that it could reverse the inflows of BTC ETFs and change the history of altcoins. Do you agree?
