Bitcoin’s price surged on Thursday following the European Central Bank’s (ECB) decision to maintain interest rates, marking the fifth consecutive meeting without a change in rates.

The largest cryptocurrency by market capitalization saw a 1.5% increase over the past 24 hours, reaching $69,607 at 11:16 a.m. ET, according to data from The Block’s Price Page. This uptick in Bitcoin’s value came amidst a broader pullback in global markets, with major equity indices experiencing declines.

Despite the Dow Jones Industrial Average falling for the fourth consecutive day and the S&P 500 and Nasdaq Composite also slipping, Bitcoin managed to defy the downward trend. In Europe, the regional Stoxx 600 index and London’s FTSE also recorded losses.

The ECB’s decision to keep interest rates unchanged at historic highs, with the key interest rate remaining at 4%, the main refinancing rate at 4.5%, and the marginal lending facility at 4.75%, contributed to Bitcoin’s positive momentum. The central bank emphasized the need for further evidence of sustained inflation convergence before considering a reduction in monetary policy restrictions.

Konstantin Veit, a Portfolio Manager at PIMCO, suggested the possibility of ECB rate cuts in June if incoming data aligns with projections outlined in March. Veit anticipates cautious rate reductions of 25 basis points once initiated, with market expectations adjusting to reflect potential reductions. However, Veit emphasized the presence of risks leaning towards fewer rate cuts, citing factors such as persistent services inflation, a resilient labor market, loose financial conditions, and ECB risk management considerations.

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Bullish sentiment continues to decline among individual investors as inflation remains elevated. According to the American Association of Individual Investors (AAII) Sentiment survey, optimism about the stock market’s short-term outlook decreased for the second consecutive week. Currently, 43.4% of respondents express optimism, compared to 47.3% and 50% in the previous two weeks. Conversely, bearish sentiment rose to 24% from last week’s 22.2%. Neutral sentiments also increased to 32.5% this week, up from 30.5% the previous week.

The recent consumer inflation report, which exceeded economists’ expectations by climbing 0.4% in March, dampened hopes for near-term Federal Reserve rate cuts. Analyst James Kostohryz suggests that barring significant disruptions like a war or oil supply crisis, there’s little justification for rate cuts before October 2024. However, President Joe Biden maintains his prediction of Fed rate cuts by year-end.

Market futures for the Nasdaq, S&P, and Dow edged higher on Thursday despite recent declines. The S&P 500 (SP500) fell nearly 1% over the past week, while the Dow Jones Industrial Average (^DJI) declined over 1%, and the NASDAQ Composite Index dropped 0.6%. The NASDAQ 100 Index saw a decline of 0.8%.

In the cryptocurrency and commodities markets, Bitcoin USD (BTC-USD) rose 4% since last Thursday, while Gold increased by nearly 3%. Gold futures achieved another record high settlement on Tuesday before experiencing a slight pullback on Wednesday.

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In the ongoing battle for dominance in the cryptocurrency investment landscape, BlackRock’s spot bitcoin exchange-traded fund (ETF) is making significant strides toward overtaking Grayscale as the largest crypto-based investment vehicle.

Three months since the inception of spot bitcoin ETF trading, BlackRock’s IBIT fund is steadily closing the gap on Grayscale’s fund in terms of assets under management (AUM). Trackinsight data compiled by The Block Data Dashboard reveals that as of Tuesday, BlackRock’s IBIT fund boasted $18.2 billion in AUM, compared to Grayscale’s $23.2 billion.

Despite Grayscale’s higher fees relative to its competitors, its GBTC fund has experienced consistent capital outflows since its launch in January. Two months ago, Grayscale’s fund held approximately $23.4 billion in AUM, whereas BlackRock’s stood at $4.4 billion, indicating a substantial narrowing of the gap in AUM between the two.

Grayscale’s ETF initially launched with nearly $30 billion in AUM, attributed to the conversion of its flagship fund. However, the declining AUM is partly attributed to Genesis selling GBTC shares, according to Eric Balchunas, senior ETF analyst at Bloomberg.

Furthermore, Grayscale’s fund has witnessed a gradual decline in trading volume market share, dropping from approximately 50% at the launch of spot bitcoin ETFs on January 11 to 23.5% as of Tuesday.

In contrast, BlackRock’s ETF has been gaining momentum, evidenced by its $128.7 million inflows on Tuesday, while Grayscale’s fund experienced $154.9 million in outflows.

Fidelity’s spot bitcoin ETF holds the third position in terms of trading volume market share and AUM, further intensifying the competition in the burgeoning cryptocurrency ETF market.

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On Wednesday, Grayscale’s bitcoin (BTC) exchange-traded fund (ETF) witnessed an unprecedented daily outflow of approximately $18 million, marking a significant departure from its usual outflow patterns since its inception in January. Reports from Bitmex Research and Farside Investors revealed this record-low figure.

This notable development comes shortly after Grayscale CEO Michael Sonnenshein indicated that outflows from the Grayscale Bitcoin Trust (GBTC) are approaching an “equilibrium,” suggesting that the selling pressure associated with settlements of bankrupt crypto firms like FTX has largely subsided.

Analysts at Coinbase Institutional have speculated that the recent uptick in GBTC selling could be attributed, at least in part, to Genesis selling shares as part of its bankruptcy proceedings.

Since its launch, the GBTC product has witnessed a staggering $15 billion in bitcoin outflows and has experienced consistent outflows almost every week, contributing to downward pressure on the asset.

Furthermore, the ETF imposes the highest annual fees among its counterparts, standing at 1.5% of holdings, compared to rates as low as 0.19% for Franklin Templeton’s EZBC.

Despite these challenges, bitcoin continues to trade resiliently, hovering just above $70,600 during European morning hours, reflecting a 2.2% increase in the past 24 hours. The broader CoinDesk 20 index also saw a 1.7% rise.

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According to a recent report by JPMorgan (NYSE:JPM), the likelihood of approval for spot ether (ETH) exchange-traded funds (ETFs) in May remains uncertain, with no more than a 50% chance of approval. The report suggests that if the Securities and Exchange Commission (SEC) does not approve these products next month, litigation against the regulatory body is probable.

JPMorgan reaffirms its stance, initially expressed in January, that approval for spot ether ETFs is unlikely in the upcoming month. The SEC is expected to make final decisions on certain ETF applications by May 23, following its approval of spot bitcoin (BTC) ETFs earlier this year, sparking speculation about potential approval for ether ETFs.

Analysts at JPMorgan, led by Nikolaos Panigirtzoglou, anticipate potential litigation against the SEC if spot ether ETFs are not approved in May. They suggest that the SEC is likely to face legal challenges, similar to previous cases involving Grayscale and Ripple, and eventually approve spot ether ETFs, albeit not in May.

The report highlights one reason why the SEC might face difficulties in any potential litigation: the decreasing concentration in staking on the Ethereum network, which reduces the likelihood of Ether being classified as a security.

Additionally, JPMorgan points out in a recent report that the share of staked ether held by Lido has continued to decline, alleviating concerns about network concentration.

The investigation by the SEC into companies associated with the Ethereum Foundation aligns with JPMorgan’s cautious outlook, reinforcing the uncertainty surrounding spot ether ETF approval in May.

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