News
Ether Stumbles After ETF Approval, Bitcoin Briefly Slips Below $68K
Key points
- Bitcoin and Ether declined on Tuesday after strong gains last week.
- Ether surged last week, buoyed by optimism that the SEC would approve a spot Ether ETF.
- The regulator has paved the way for spot ether ETFs by changing the rules that allow such products to be listed, but it could take months before a spot ether ETF is available for trading.
- The U.S. House of Representatives has passed a bill that will provide greater clarity and divide regulatory jurisdiction for cryptocurrencies. The bill is pending in the Senate and does not have the support of President Joe Biden.
- Former US President Donald Trump has reiterated his support for cryptocurrencies, saying he will pardon the convicted founder of the darknet marketplace Silk Road.
After last week’s brief but sharp price jumps, bitcoin (BTC) and ether (ETH) dropped on Tuesday.
Bitcoin briefly fell below $68,000 after trading above $70,000 early last week. Meanwhile, ether is up about 25% in 24 hours amid optimism surrounding the approval of spot ether exchange-traded funds (ETFs). However, the surge was short term despite the regulatory approval of the product.
Other big news includes the growing reference to cryptocurrencies by US presidential candidates in an effort to woo voters, a UK judge’s scathing opinion on why Craig Wright’s claim to be Satoshi Nakamoto, the creator of Bitcoin, doesn’t hold up, and a prison sentence for a former FTX executive.
Regulators Set the Stage for Spot Ether ETFs
On Thursday, the U.S. Securities and Exchange Commission (SEC) unexpectedly paved the way for the spot ether ETF quote on U.S. stock exchanges. Ether, the cryptocurrency that powers the Ethereum network, is the second-largest cryptocurrency by market capitalization after Bitcoin.
Although the SEC’s decision marked a significant regulatory changethe listing of these ETFs by companies such as BlackRock (BLACK), Grayscale and Fidelity could still be months apart. The products must first receive approval for their Filing of S-1 Registration Applicationswhich Galaxy Digital says could take until July or August.
If given the final green light, a key question is whether ether ETFs will generate demand similar to the historic launch of spot bitcoin ETFs in the U.S., which have amassed about $13.5 billion in inflows, according to Farside Investors.
While some are optimistic about the new listings attracting retail and institutional investors, others remain cautious, noting that the ether market is smaller and less recognized than bitcoin. Additionally, the lack of access to ETF-held ether staking presents a significant limitation for investors.
House moves to pass cryptocurrency regulation bill
The cryptocurrency sector scored a significant victory in Washington last week, when the House of Representatives overwhelmingly voted in favor of the Financial Innovation and Technology for the 21st Century Act (FIT21).
The bill proposes to elevate the Commodity Futures Trading Commission (CFTC) to the primary regulator of digital assets, granting it exclusive authority over cash or spot markets for digital commodities, while the SEC would regulate digital assets with non-decentralized blockchains. This clear division of regulatory responsibilities is what the cryptocurrency industry has long sought.
Despite a strong House vote (279-136), the bill faces a challenging path in the Senate, where passage is uncertain. President Joe Biden has opposed FIT21, citing insufficient protections for consumers and investors.
Former President Trump Doubles Down on Cryptocurrency Support
In an effort to appeal to libertarian voters and position himself as a pro-crypto candidate, Donald Trump has called for his sentence to be commuted Ross Ulbrichtthe sentence. Ulbricht, the convicted operator of the Silk Road online marketplace, is serving a life sentence for running a platform where illegal drugs and other illicit goods were purchased using bitcoin.
Speaking at the Libertarian National Convention, Trump promised: “If you vote for me, on day one I will commute Ross Ulbricht’s sentence. He’s already done 11 years. We’re going to bring him home.”
The move reflects Trump’s strategy to broaden his base of support ahead of a rematch with President Joe Biden in November while seeking to neutralize the threat of third-party candidates like Robert F. Kennedy Jr.
Trump’s public embrace of cryptocurrencies represents a sharp departure from his previous comments, in which he expressed a strong preference for the U.S. dollar over bitcoin.
Judge rules Craig Wright is a fraud
According to WIRED, a UK High Court judge has ruled that the computer scientist My Friend Craig Wright he lied extensively and committed large-scale forgery in an attempt to prove that he was Satoshi Nakamoto.
In a detailed ruling released May 20, Judge James Mellor found that Wright falsified numerous documents to support his false claims and used the courts to perpetrate fraud.
“I am absolutely convinced that Dr. Wright has lied extensively and repeatedly to the Court,” Mellor wrote.
The ruling marks the end of a six-week lawsuit filed by the Crypto Open Patent Alliance (COPA), which sought a declaration that Wright is not the creator of Bitcoin, to prevent him from filing various lawsuits against Bitcoin developers and other parties.
Despite Wright’s intention to appeal, his credibility has been significantly damaged.
What to expect from the markets this week
Regulators and cryptocurrency market watchers will be closely watching the fate of the FIT21 bill as it moves through the Senate.
Additionally, another former executive at defunct cryptocurrency exchange FTX has been convicted. The former co-CEO of the exchange’s Bahamian entity, Ryan Salame, received 90 months in prison for campaign finance violations and conspiracy to operate an unlicensed money transmitter.
Tuesday also saw a big deal brewing. Bitcoin infrastructure firm Riot Platforms (REVOLT) said it would acquire bitcoin mining company Bitfarms in a part-cash, part-stock deal. Riot’s purchase offer is $2.30 per Bitfarm share, a 24% premium to the one-month volume-weighted average price as of May 24, for a total equity value of $950 million. Riot already owns a 9.25% stake in Bitfarms and says the deal would result in “the world’s largest publicly traded bitcoin miner.”