Cryptocurrency market update: Ether falls post-ETF approval, Bitcoin temporarily dips below $68K

Following significant price spikes last week, both bitcoin (BTC) and ether (ETH) experienced declines on Tuesday.

Bitcoin briefly dropped below $68,000 after surpassing $70,000 earlier in the week. Meanwhile, ether saw a rapid 25% increase in 24 hours following the approval of spot ether exchange-traded funds (ETFs), but the uptick was short-lived despite the regulatory approval.

Other notable developments included increased mentions of cryptocurrency by U.S. presidential candidates, a critical assessment by a U.K. judge regarding Craig Wright's claim to be bitcoin's creator Satoshi Nakamoto, and the sentencing of a former FTX executive to prison.

Regulators pave the way for spot Ether ETFs

On Thursday, the U.S. Securities and Exchange Commission (SEC) unexpectedly cleared the path for the listing of spot ether ETFs on U.S. exchanges. Ether, the cryptocurrency that powers the Ethereum network, is the second-largest cryptocurrency by market capitalization, following bitcoin.

Despite this significant regulatory shift, the listing of these ETFs by companies such as BlackRock (BLK), Grayscale, and Fidelity may still be months away. The products must first gain approval for their S-1 registration filings, which could take until July or August, according to Galaxy Digital.

If they receive final approval, a crucial question will be whether ether ETFs can generate demand similar to the historic launch of U.S. spot bitcoin ETFs, which have attracted approximately $13.5 billion in inflows, according to Farside Investors.

While some are hopeful that the new listings will attract both retail and institutional investors, others remain cautious. They point out that ether's market is smaller and less well-known than bitcoin's. Furthermore, the inability to stake ether held in ETFs is a significant drawback for investors.

House advances crypto regulation bill

Last week, the crypto industry scored a major win in Washington as the House of Representatives voted overwhelmingly for the Financial Innovation and Technology for the 21st Century Act (FIT21).

The bill aims to designate the Commodity Futures Trading Commission (CFTC) as the primary regulator for digital assets, giving it exclusive authority over cash or spot markets for digital commodities. Meanwhile, the SEC would regulate digital assets with non-decentralized blockchains. This clear separation of regulatory duties is a long-sought goal for the crypto industry.

Despite the House’s decisive 279-136 vote, the bill faces a tough road in the Senate, where its approval is uncertain. President Joe Biden opposed FIT21, citing a lack of sufficient consumer and investor protections.

Former president Trump reinforces support for cryptocurrency

In an effort to appeal to Libertarian voters and position himself as the pro-crypto candidate, Donald Trump called for the commutation of Ross Ulbricht's 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 items were purchased using bitcoin.

During a speech at the Libertarian party convention, Trump pledged, "If you vote for me, on day one I will commute the sentence of Ross Ulbricht. He’s already served 11 years. We’re gonna get him home."

This move is part of Trump's strategy to broaden his support base ahead of his rematch with President Joe Biden in November, aiming to neutralize the threat of third-party candidates such as Robert F. Kennedy Jr.

Trump's public endorsement of cryptocurrency marks a significant shift from his past comments, where he strongly favored the U.S. dollar over bitcoin.

Judge Declares craig wright a fraud

According to WIRED, a judge in the U.K. High Court has concluded that computer scientist Craig Wright engaged in extensive deceit and substantial forgery in his efforts to prove he is Satoshi Nakamoto. In a comprehensive ruling released on May 20, Justice James Mellor determined that Wright manufactured numerous documents to support false assertions and manipulated legal proceedings to perpetrate fraud.

"I am fully convinced that Dr. Wright made repeated and extensive false statements to the Court," Mellor stated. This decision follows a six-week trial initiated by the Crypto Open Patent Alliance (COPA), which aimed to establish that Wright is not the creator of Bitcoin, thereby preventing him from pursuing multiple lawsuits against Bitcoin developers and others.

Despite Wright's plans to appeal, the ruling has severely undermined his credibility.

What can we anticipate in the markets this week?

Regulators and observers of the cryptocurrency market will closely monitor the progress of the FIT21 bill as it moves to the Senate.

Additionally, another former executive from the now-defunct crypto exchange FTX has been sentenced. Ryan Salame, former co-CEO of FTX's Bahamian entity, has received a 90-month prison term for violating campaign finance laws and conspiring to operate an unlicensed money transmitter.

On Tuesday, significant developments unfolded as Bitcoin infrastructure company Riot Platforms (RIOT) announced its intention to acquire bitcoin mining firm Bitfarms in a cash-and-stock deal. Riot has proposed to purchase Bitfarms at $2.30 per share, a 24% premium over its one-month volume-weighted average share price as of May 24, amounting to a total equity value of $950 million. Riot already holds a 9.25% stake in Bitfarms and aims to create the "world’s largest publicly listed bitcoin miner" through this acquisition.