Crypto Market Shaken by ETF Approvals and Political Announcements Amid Volatile Swings

On July 23, 2024, the U.S. Securities and Exchange Commission approved the first spot exchange-traded funds (ETFs) holding Ethereum's ether, following a similar approval for Bitcoin ETFs in January. This approval allows Americans to invest in the second-largest cryptocurrency through conventional brokerage accounts, potentially increasing its accessibility and appeal to traditional investors. Bitcoin ETFs have already attracted tens of billions of dollars since their debut. The approval process for ether ETFs gained momentum in late May, leading to full approval. Analysts predict that while the introduction of spot ETH ETFs could drive ether's price up to $6,500, the inflows might not match the initial surge seen with Bitcoin ETFs, estimated to attract $15 billion to $20 billion in the first year. Industry leaders like Matt Hougan of Bitwise and Kyle DaCruz of VanEck highlight the significance of this development, emphasizing Ethereum's role as a crucial platform for blockchain applications. 

At the beginning of the past week, Bitcoin remained resilient at around $66,000 despite significant declines in the Nasdaq and S&P 500, which suffered their worst drops since late 2022. In contrast, Ethereum's price fell nearly 4% to $3,300 following its spot ETF debut, marking its lowest price against Bitcoin in two months. Crypto market maker Wintermute noted that the ETF launch was a marginal success but did not immediately trigger a significant repricing. Bitcoin then experienced significant price volatility during former U.S. President Donald Trump's speech at the Bitcoin 2024 conference in Nashville. Trump announced plans to establish a "strategic national bitcoin stockpile" if re-elected, aligning with market expectations. Leading up to his comments, Bitcoin surged above $69,000, approaching the $70,000 mark for the first time since early June, driven by former President Trump's announcement.

However, on July 30, 2024, Bitcoin fell to $66,000, erasing last week's gains as market sentiment was affected by the U.S. government moving $2 billion worth of Bitcoin, sparking fears of impending selling pressure. The U.S. Marshals Service transferred the funds to two new wallets, with at least one likely being a custodial service. Bitcoin saw a 5% decline before a slight recovery. Solana's SOL led major losses, dropping 6%, while other cryptocurrencies like Cardano's ADA, Dogecoin, and BNB fell by 5%, 4%, and 4%, respectively. Despite $97 million in net outflows from newly launched spot ETH ETFs, ether showed relative strength with only a 1% decline.

Market analysts warned of potential near-term losses due to macroeconomic factors and a lack of new catalysts. Last week's optimism, driven by former President Trump's pro-Bitcoin speech at the Bitcoin 2024 conference, has faded, leading to a "sell the news" phase. Upcoming interest rate decisions from the Bank of Japan, Federal Reserve, and Bank of England on Wednesday and Thursday are expected to further increase market volatility.