Ether Fumbles After ETF Nod, Bitcoin Briefly Slides Below $68K

After brief but sharp price jumps last week, bitcoin (BTC) and ether (ETH) headed lower Tuesday.

Bitcoin briefly slipped below $68,000 after trading above $70,000 early last week. Meanwhile, ether surged roughly 25% in 24 hours amid optimism surrounding the approval of spot ether exchange-traded funds (ETFs). However, the surge was short-lived despite the regulatory greenlight for the product.

Other big news included increasing mentions of crypto by U.S. presidential candidates as they seek to woo voters, a U.K. judge’s scathing opinion about why Craig Wright’s claim of being bitcoin-creator Satoshi Nakamoto doesn’t hold and a prison sentence for one 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 listing of spot ether ETFs on U.S. exchanges. Ether, the cryptocurrency powering the Ethereum network, is the second-largest cryptocurrency by market capitalization behind bitcoin.

Although the SEC’s decision marked a significant regulatory shift, the listing of these ETFs by companies like BlackRock (BLK), Grayscale, and Fidelity could still be months away. The products must first receive approval for their S-1 registration filings, which may take until July or August, according to Galaxy Digital.

Should they receive the final go-ahead, a key question is whether ether ETFs will generate demand similar to the historic launch of U.S. spot bitcoin ETFs, which have amassed roughly $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 ether’s market is smaller and less recognized than bitcoin’s. Additionally, the lack of staking access for ETF-held ether presents a notable limitation for investors.

House Moves On Crypto Regulation Bill

The crypto industry achieved a significant victory in Washington last week as the House of Representatives voted overwhelmingly in favor of the Financial Innovation and Technology for the 21st Century Act (FIT21).

The bill proposes elevating the Commodity Futures Trading Commission (CFTC) as the primary overseer 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 crypto industry has long sought.

Despite the House’s strong 279-136 vote, the bill faces a challenging path in the Senate, where approval is uncertain. President Joe Biden opposed FIT21, citing insufficient consumer and investor protections.

Former President Trump Doubles Down on Crypto Endorsement

In a bid 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 reflects Trump’s strategy to broaden his support base ahead of his rematch with President Joe Biden in November, seeking to neutralize the threat of third-party candidates such as Robert F. Kennedy Jr.

Trump’s public embrace of crypto is a big departure from his past comments when he espoused his strong preference for the U.S. dollar over bitcoin.

Judge Rules That Craig Wright is a Fraud

According to WIRED, a U.K. High Court judge has determined that computer scientist Craig Wright lied extensively and committed large-scale forgery in his attempt to prove he is Satoshi Nakamoto.

In a detailed judgment published on May 20, Justice James Mellor found Wright fabricated numerous documents to support his false claims and used the courts to perpetrate fraud.

“I am entirely satisfied that Dr. Wright lied to the Court extensively and repeatedly,” Mellor wrote.

This ruling marks the end of a six-week trial initiated by the Crypto Open Patent Alliance (COPA), which sought a declaration that Wright is not Bitcoin’s creator to prevent him from pursuing various lawsuits against Bitcoin developers and other parties.

Despite Wright’s intention to appeal, his credibility has been significantly damaged.

What to Expect in the Markets This Week

Regulators and cryptocurrency market watchers will be keeping a close eye on the fate of the FIT21 bill as it heads to the Senate.

Additionally, another former executive at defunct crypto exchange FTX has been sentenced. The former co-CEO of the exchange’s Bahamian entity, Ryan Salame, received 90 months in prison for violations of campaign finance laws and conspiracy to operate an unlicensed money transmitter.

Tuesday also saw a big deal brewing. Bitcoin infrastructure company Riot Platforms (RIOT) said it wants to acquire bitcoin mining firm Bitfarms in a part cash, part stock deal. Riot’s purchase offer stands at $2.30 per Bitfarm share, a 24% premium over its one-month volume-weighted average share price as of May 24 for a total equity value of $950 million. Riot already owns a 9.25% stake in Bitfarms and claims the deal would result in the “world’s largest publicly listed bitcoin miner.”