May is behind us. As it turned out, another breakthrough month in the history of cryptocurrencies. Together with zondacrypto, we summarize what has happened over the last 30 days.
Monthly Summary: zondacrypto indicates that institutional investors are here to stay
Institutions are pouring huge amounts into the cryptocurrency market, reaching a record high of $14.9 billion so far, surpassing the previous record of $10.6 billion set in 2021.
This growth is driven by growing confidence in the stability and growth potential of cryptocurrencies and the growing adoption of blockchain technology
– Sebastian Seliga from zondacrypto explains to us.
However, the concept of “cryptocurrency market” is a bit misleading here. zondacrypto analyst indicates that it is mainly about bitcoin and ether:
Bitcoin remains the undisputed leader in the cryptocurrency landscape, with financial institutions adding $1.05 billion to their holdings last week, bringing the total inflow to $14.6 billion this year alone. Ethereum is also seeing strong interest, attracting $36 million in institutional investment last week, the highest since March, likely due to the SEC's approval of ether ETFs.
BlackRock Becomes Largest Bitcoin ETF
Seliga adds that “BlackRock's iShares Bitcoin Trust has become the world's largest fund, accumulating nearly $20 billion in assets since listing in the U.S. at the beginning of the year.”
According to data collected by Bloomberg, the BlackRock Bitcoin Trust held $19.68 billion in tokens at the end of May, dethroning the Grayscale Investments Bitcoin Trust which held $19.65 billion. The third largest fund is Fidelity Investments, worth USD 11.1 billion.
(…) global bitcoin ETFs now manage over a million BTC in total.
This achievement is significant for several reasons. First, it makes investing in Bitcoin more accessible to a wider range of investors. Secondly, it offers a regulated investment vehicle, providing security and peace of mind. Third, ETFs contribute to increasing BTC liquidity, potentially reducing price volatility. This achievement represents a significant step forward in Bitcoin's development towards becoming a mainstream financial instrument
– he adds.
Regulatory repression and economic uncertainty
This is good news. But something bad is happening in the background. It's about the actions of officials.
The U.S. Department of Justice (DoJ) and the Securities and Exchange Commission (SEC) are increasing their regulatory activities in the industry, which may lead to increased volatility. Investors will also closely monitor US economic data and monetary policy, as these factors could significantly impact the cryptocurrency market
– explains Selig.
Potential growth catalysts
However, summing it all up, the zondacrypto expert sees the potential for an increase in cryptocurrency valuations. It points to a couple of factors:
Bitcoin Halving: The recent Bitcoin halving on April 19, which halved the reward for miners, has historically always initiated bull markets in the BTC market. Many investors expect significant growth in the coming months.
AI Tokens: Artificial intelligence (AI)-focused cryptocurrencies such as fetch.ai (FET) have seen significant growth in 2024, driven by excitement around the AI investment thesis and partnerships with large corporations.
Spot ETF Approvals: The approval of bitcoin funds has already stimulated the market, and the rise of their ether counterparts may further increase interest and institutional adoption.
Summary
Finally, let's give Seliga the floor once again:
The cryptocurrency market in May 2024 is characterized by, on the one hand, record institutional inflows, a record amount of BTC in management, and on the other, regulatory and legal challenges. These factors create a scenario for further volatility and potential investment opportunities, especially considering potential growth catalysts for the cryptocurrency market.
