The cryptocurrency market received a powerful boost on May 21, as Ethereum (ETH) surged over 20% within 24 hours, fueled by renewed optimism around the potential approval of a spot ETH ETF. Bitcoin (BTC) wasn’t far behind, climbing approximately 8%, briefly pushing past $72,000. At its peak, ETH soared above $3,800—just 7% shy of its March high of $4,100. While prices have since pulled back slightly, the momentum has reignited investor interest across the broader altcoin ecosystem.
This sudden rally came after a nearly two-month period of stagnation, making the move even more significant. The catalyst? A tweet from Bloomberg ETF analyst Eric Balchunas suggesting a major shift in the U.S. Securities and Exchange Commission’s (SEC) stance toward approving a spot Ethereum ETF. But what lies beneath this surge—and is it still wise to enter the market now?
Why the Sudden Change in Sentiment?
Market sentiment around the SEC’s decision on May 23 had been largely pessimistic. So why such a dramatic reversal?
One key factor may be political timing. With the U.S. presidential election approaching at the end of 2025, both major parties are under pressure to appeal to niche voter bases—including crypto investors. While Republican candidate Donald Trump has positioned himself as pro-crypto—accepting cryptocurrency donations and voicing support—President Joe Biden's administration has been quieter on the issue.
Recent speculation suggests that the Democratic party might be urging the SEC to greenlight positive crypto developments, such as an ETH ETF, to win favor with tech-savvy and younger voters. This political backdrop could explain the sudden uptick in approval odds, which some macro analysts now estimate at up to 75%.
Early Warning Signs Before the Surge
Hindsight is always 20/20, but there were clear signals before the rally began:
- On-chain activity: Major players on Bitfinex increased their long leveraged positions in the ETH/BTC pair on May 19—the third significant accumulation since March 11 and the largest in two years.
- Technical indicators: On the 12-hour chart, MACD showed multiple bullish divergences prior to the breakout from a descending trendline, signaling hidden strength.
These early signs were shared within analyst communities ahead of the move, highlighting the importance of monitoring both technical and on-chain data for timely entries.
Should You Buy ETH Now?
Despite the excitement, chasing the rally at current levels may not be ideal for every investor.
Risks of Late Entry:
- Limited upside: With ETH already near its year-to-date high, the potential reward-to-risk ratio is less favorable.
- Event-driven volatility: The market has largely priced in a positive ETF decision. If approvals are delayed or denied on May 23 (VanEck) or May 24 (Ark/21Shares), a sharp correction could follow.
- Smart money exits: Reports indicate that large traders who accumulated early have already begun taking profits.
For derivatives traders, entering long positions now equates to gambling on regulatory outcomes. However, long-term spot investors may consider a strategic approach: allocating a portion of capital now and reserving funds for post-decision entry—regardless of the outcome.
Why wait? Because even if approval is delayed, the overall trend suggests bullish momentum is building. The altcoin market appears poised for a broader rally, especially within Ethereum’s ecosystem.
Market Opportunities Beyond ETH
Ethereum Ecosystem (Layer 2 & DeFi)
With ETF hopes lifting ETH, related projects are also gaining traction:
- Layer 2 tokens like ARB and OP jumped over 20%.
- DeFi leaders such as LDO rose nearly 40% in two days.
- Restaking protocols and yield aggregators are regaining attention.
This resurgence could mark the beginning of a new narrative cycle centered on scalable, yield-generating Ethereum-based applications.
Solana (SOL) – The Next ETF Candidate?
If spot ETH ETFs gain approval, market attention will likely shift to the next probable candidate: Solana (SOL). Much like how BTC ETF approval turned focus toward ETH, SOL is emerging as a strong contender due to its growing institutional interest and robust network activity.
Monitoring SOL’s ecosystem—and its associated tokens—could offer early-mover advantages in the next phase of market expansion.
👉 Explore emerging blockchain ecosystems before they enter mainstream adoption.
AI-Driven Crypto Projects
NVIDIA’s upcoming quarterly earnings are expected to reignite interest in AI-related cryptocurrencies. Despite many AI tokens lacking tangible products, investor sentiment often reacts strongly to macro developments in tech.
Tokens linked to decentralized compute, machine learning infrastructure, or data markets may experience heightened volatility following positive guidance from NVIDIA or advancements in models like GPT-4o.
Key Developments Shaping Market Sentiment
VanEck’s ETH ETF Listed on DTCC
VanEck’s proposed spot Ethereum ETF has appeared on the Depository Trust & Clearing Corporation (DTCC) website—a procedural step indicating backend readiness. While not confirmation of approval, it signals progress in the regulatory pipeline.
Record Futures Open Interest
ETH futures open interest hit a record $14.6 billion amid growing ETF approval expectations. Analysts have revised odds from 25% to as high as 75%, reflecting increasing confidence in regulatory acceptance.
Shift in Crypto Narratives
According to data analytics firm Kaito, narrative focus in crypto is shifting:
- AI remains dominant, capturing significant mindshare.
- BRC-20 tokens are fading, losing relevance compared to earlier hype cycles.
- VC-backed tokens struggle, with many low-float, high-FDV projects seeing continuous sell pressure from insiders.
Caution Around KOL Influence
A recent study found that tokens promoted by crypto influencers often deliver negative returns over time. While short-term pumps occur, average losses reach $79 per $1,000 invested within a month. This underscores the need for independent research over blind following.
👉 Avoid emotional trading—make informed decisions using data-driven tools and market intelligence.
Frequently Asked Questions (FAQ)
Q: What happens if the SEC rejects the ETH ETF?
A: A rejection would likely trigger short-term downside pressure on ETH and related assets. However, given the growing political and institutional support, future reapplications remain probable.
Q: Is it too late to invest in ETH?
A: For long-term holders, dollar-cost averaging into ETH—even after a rally—can still be effective. Timing perfection is less important than participation in foundational blockchain trends.
Q: Which altcoins benefit most from ETH’s rise?
A: Layer 2 solutions (ARB, OP), DeFi leaders (UNI, LDO), and staking protocols typically outperform during ETH bull runs.
Q: Could SOL get its own ETF soon?
A: While no formal filings exist yet, growing institutional interest makes SOL a likely candidate for future ETF consideration—especially if ETH sets a regulatory precedent.
Q: How should traders position before the ETF decision?
A: Avoid aggressive leveraged bets. Spot accumulation or small-scale options strategies offer better risk control ahead of volatile news events.
Q: Are AI crypto projects worth investing in?
A: High risk, high reward. Focus on projects with actual product traction rather than speculative hype.
Core Keywords: Ethereum ETF, ETH price prediction, spot ETH ETF approval, Ethereum ecosystem, Solana ETF potential, AI crypto projects, crypto market analysis