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Bitcoin (BTC) prices have recovered and other major cryptocurrencies have gained ground over the past month as the U.S. Securities and Exchange Commission surprised Wall Street by making a rule change to allow the creation of Ethereum (ETH) exchange-traded funds at View.

Investors have already flocked to bitcoin and other cryptocurrencies following the SEC’s approval in January of the first spot bitcoin ETFs for trading on major U.S. exchanges. However, regulators continue to target the cryptocurrency industry, taking on cryptocurrency exchanges and their high-level executives, including associates of former FTX CEO Sam Bankman-Fried.

Furthermore, cryptocurrency investors hope that the Federal Reserve has made enough progress on inflation to navigate a soft landing for the US economy and begin cutting interest rates in the second half of 2024.

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May Crypto Market Performance

After rising to $3,973 for the month, Ethereum was on track to close May above $3,770 as investors expected the first spot Ethereum ETF Getting to the market could be just around the corner.

Unlike futures ETFs – which use futures contracts to track the potential future price of an underlying asset, spot cryptocurrency ETFs track the current or spot price of a cryptocurrency.

Optimism surrounding the possible SEC approval of spot Ethereum ETFs also pushed other cryptocurrencies higher in the month of May, with bitcoin prices rising to $72,000.

However, the price of bitcoin retreated from these highs towards the end of the month, although BTC was still on track to end May above $68,200.

In total, bitcoin prices rose 5.9% in May and are now up more than 60% year to date. Ethereum prices are also up over 17.1% for the month and are up 64.1% overall so far in 2024.

Among the top 10 cryptocurrencies by market capitalization, ChainLink (LINK) was the best performer in May with a 29% gain. Cardano (ADA) was the worst performer with a 1.8% drop.

SEC Opens Doors to Spot Ethereum ETFs

Less than six months after the SEC approved the first Spot bitcoin ETFsThe regulator recently made a major rule change that could pave the way for the first spot Ethereum ETFs to trade on major US exchanges.

On May 23, the SEC issued a rule change that allows three major US exchanges to list and trade potentially eight different Ethereum spot funds. Approvals include the following grants and funds:

• NYSE Arca: Grayscale Ethereum Trust and Bitwise Ethereum ETF
• Nasdaq: iShares Ethereum Trust
• CBOE BZX: VanEck Ethereum Trust, ARK 21Shares Ethereum ETF, Invesco Galaxy Ethereum ETF, Fidelity Ethereum Fund and Franklin Ethereum ETF

This ruling gives exchanges the green light to list SEC-approved Ethereum spot ETFs, but only if the SEC has first approved the individual funds themselves. The rule change does not guarantee that all of the funds mentioned above will be approved or that they will be launched in the near future. The SEC has yet to decide on each Ethereum ETF application individually and has not provided any timeline for those decisions.

Spot Bitcoin ETFs have paved the way

After years of repeated rejections, the SEC finally approved the top spot bitcoin ETFs in January 2024, and the funds were a success.

The 11 SEC-approved bitcoin spot ETFs generated net inflows of more than $12 billion, according to FactSet. Top bitcoin spot funds include BlackRock’s iShares Bitcoin Trust (IBIT) and Grayscale’s Grayscale Bitcoin Trust (GBTC), each of which has nearly $20 billion in assets.

Bitcoin and Ethereum are not the same

Bitcoin and Ethereum have separated themselves from thousands of other cryptocurrencies as market leaders, accounting for 70.8% of the total global cryptocurrency market capitalization. However, while both Bitcoin and Ethereum have been exceptional long-term investments up to this point, their designs and goals are very different.

Bitcoin investors view the cryptocurrency primarily as a store of value and an alternative to traditional government-backed fiat currencies.

Ether is the native cryptocurrency of the Ethereum network, which houses decentralized applications, smart contracts, non-fungible tokensor NFTs and other decentralized blockchain projects.

How Spot Ethereum ETFs May Differ From Spot Bitcoin ETFs

Market experts predict that the first class of spot Ethereum ETFs will be much smaller than their spot Bitcoin counterparts.

The Grayscale Ethereum Trust (ETHE), which currently trades over the counter in the United States, it only has about $11 billion in assets under management. Grayscale secured a major legal victory over the SEC in 2023, which helped pave the way for the SEC to approve the first bitcoin ETFs just months later.

Joel Kruger, market strategist at LMAX Group, says the SEC ruling and the potential launch of spot Ethereum ETFs likely mean Ethereum prices are poised to reach new highs in the near future.

“As a reminder, both bitcoin and ETH reached record highs in 2021, but only bitcoin managed to surpass the previous record in 2024,” says Kruger.

“Given the positive momentum on the adoption and regulatory fronts, we suspect that ETH will indeed be able to reach a new all-time high, which could very well translate into another big increase in bullish momentum in the coming days and weeks.”

Other Crypto Headlines

As the 2024 election season ramps up, cryptocurrencies are receiving high-level attention in Washington, D.C.

In May, the House of Representatives passed the Financial Innovation and Technology for the 21st Century Act by 279 votes to 136. The bill gained unanimous Republican support and 71 House Democrats, including former House Speaker Nancy Pelosi, voted to favor. also.

If sanctioned, it will provide a detailed framework for the disclosure and registration of digital asset companies. It would also make the Commodity Futures Trading Commission, or CFTC, the main crypto industry regulator.

The SEC has faced harsh criticism from crypto experts for keeping the industry under traditional disclosure regimes.

Crypto and the US Presidential Race

Former president and presumptive Republican presidential candidate Donald Trump has apparently changed his mind about cryptocurrencies.

In May, Trump said that, if elected, he would commute the sentence of Ross Ulbricht, the cryptocurrency advocate and former operator of the black market website Silk Road, who is currently serving multiple life sentences. Although Trump has previously said he is “not a fan” of cryptocurrencies, his campaign announced in May that it will now accept cryptocurrency donations.

Independent presidential candidate Robert F. Kennedy Jr. spoke at the Consensus 2024 event in late May, signaling his support for blockchain innovation and his commitment to protecting the industry from hostile regulators.

Consensus 2024 was a cryptocurrency industry-related event organized by crypto media company CoinDesk.

Kennedy had previously highlighted the potential power of cryptocurrency to help protect Americans’ transactional freedom.

Phillip Shoemaker, CEO of Identity.com, says the 2024 elections could be the first in which top US politicians use cryptocurrency policies to attract voters.

“Congress promoted a market structure bill as a way to properly regulate crypto, and this represents huge progress for the space,” says Shoemaker.

He says there are many voters in the crypto space who are single-issue voters, and politicians seem to be aware of the opportunity this stance creates.

“You have Trump and RFK Jr. talking positively about crypto — and again, this is brand new.”

Another FTX sentence

On May 28, former FTX executive Ryan Salame was sentenced to 7.5 years in prison for his role in crimes associated with the 2022 collapse of cryptocurrency exchange FTX.

FTX founder Sam Bankman-Fried was sentenced to 25 years in prison in March, but Salame is the first of Bankman-Fried’s associates to be convicted and sentenced as well.

Crypto Catalysts Ahead

A major cryptocurrency market catalyst in June could be the Federal Reserve. In addition to announcing an interest rate decision at its meeting ending June 12, the FOMC will also provide updated long-term economic projections, including its expectations for how many interest rate cuts investors can expect in 2024.

The bond market predicts a 64.7% chance that the Fed will cut interest rates by November 2024, but a positive employment report in May or an inflation reading could put pressure on the Fed to keep interest rates at the same level. current for longer than expected.

Stephanie Vaughan, co-founder of decentralized finance protocol Veda, says the launch of the first spot Ethereum ETFs will be a major crypto market catalyst in June and beyond.

“These ETFs are basically a traditional wrapper for accessing the emerging world of crypto – in this case, the world’s most important smart contract blockchain. More than that, I think Ethereum ETFs will help drive education and understanding in terms of what Ethereum actually does and why it is such an incredible innovation,” says Vaughan.

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