Cryptocurrencies Soar Following Increased Likelihood of Ethereum ETF Approval

The prospect of Ethereum ETF approval has fueled a rally across the cryptocurrency market, with Ethereum (ETH) in particular surging over 19% in recent hours, surpassing $3,600. Bitcoin (BTC) has also climbed above $71,000.

Bloomberg analysts James Seyffart and Eric Balchunas have raised the odds of Ethereum ETF approval to 75% from 25%. They point to rumors suggesting a potential shift in the Securities and Exchange Commission’s (SEC) stance on the matter, which has become an increasingly politicized issue.

ETF Approval Deadlines

The SEC faces a number of key deadlines this week to either approve or reject ETF applications, after delaying decisions on these funds multiple times.

Impact on Cryptocurrency Prices

In tandem with Ethereum’s rise, Bitcoin (BTC) has also seen gains, climbing over 6% and approaching the $71,000 mark. Grayscale Ethereum Trust (ETHE), a closed-end fund that Grayscale has proposed converting into an ETF, also surged over 23% on Monday after trading at a discount of over 20% to its net asset value.

Outlook

Recent developments suggest that the market sees an increasing chance of Ethereum ETF approval, driving prices higher and encouraging investment in digital assets. This potential policy shift by the SEC could have a significant impact on the cryptocurrency market in the coming days.

Gold Slips from Record High as Dollar Stabilizes

Global gold prices have retreated during today’s trading session, Tuesday, after reaching a new record high in the previous session driven by growing bets on US interest rate cuts and geopolitical risks that are driving safe-haven demand.

The US dollar index has stabilized, making the dollar-denominated yellow metal less attractive to buyers from holders of other currencies. However, lower interest rates and geopolitical uncertainties make bullion an attractive investment.

“Buying in China was exceptional in the first quarter, with demand for bars and coins very strong, the highest since 2017,” said Standard Chartered analyst Suki Cooper. “These factors are more than offsetting outflows from ETPs.” Federal Reserve Vice Chairman Philip Jefferson said the recent pullback in some key inflation gauges is encouraging, but it’s too early to say whether inflation is back on a sustainable path to 2%.

Atlanta Fed President Raphael Bostic expects to cut rates once this year, in the fourth quarter, noting that inflation will continue to decline this year and into 2025, but at a slower pace than expected. Investors are now awaiting the release of the minutes of the Fed’s latest policy meeting on Wednesday, along with comments from a number of Fed speakers this week.

Gold and Dollar Now

Gold futures are now down 0.76% to $2419 an ounce.

Spot gold is down about 0.42% to $2416 an ounce.

On the other hand, the dollar index is flat at 104.470 points.

Other Metals

Silver fell 1.4% in spot trading to $31.38 an ounce after hitting an over-11-year high in the previous session.

“Investors are drawn to silver because the fundamentals are very strong, along with growing industrial demand and it is a cheaper alternative to gold.”

Platinum lost 0.9% to $1036.95 after hitting its highest since May 12, 2023 on Monday. Palladium fell 1.9% to $1007.75.

Australian Dollar Retreats from 4-Month High Despite RBA Hawkishness

The Australian dollar retreated in the European market on Tuesday against a basket of global currencies, continuing its losses for the second consecutive day against the US dollar, moving away from its four-month highs due to profit-taking and corrective action, which overshadows the impact of the Reserve Bank of Australia’s (RBA) latest monetary policy meeting minutes.

The RBA’s comments were more hawkish than expected, leading to a decline in the chances of Australian interest rate cuts this year, pending further inflation and labor market data from Australia in the coming period.

Reserve Bank of Australia

The minutes of the Reserve Bank of Australia’s (RBA) latest monetary policy meeting, held on May 7, 2024, were released in Sydney a short while ago. The meeting resulted in the decision to keep Australian interest rates unchanged at 4.35%, their highest level since November 2011, for the fourth meeting in a row.

The RBA stated that its “immediate priority is to return inflation to the medium-term target.” The RBA added that “recent data indicates that inflation risks have increased somewhat.”

The RBA said that “recent data raises concerns, and inflation remains above the target for an extended period.” The RBA added that “there is limited tolerance for the Consumer Price Index to reach the target after 2026.” The RBA said that “it is difficult to judge future changes in the cash rate, whether upwards or downwards.”

Australian Interest Rates

It appears that the RBA is in no hurry to take any major steps regarding monetary policy settings this year, and therefore, interest rate cuts in Australia are unlikely in 2024.

For further insights, check OneRoyal’s Facebook, Instagram, and Twitter pages and expand your understanding of financial markets with global perspectives.  Staying informed is crucial in the ever-evolving world of finance.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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