Crypto policy takes center stage in the US

Hola folks!

The week that went by witnessed a whirlwind of activity with spot Ether ETF approval in the US making crypto headlines across the globe. The Ether ETF approval, the US passing its first crypto policy bill, and US presidential candidate Donald Trump’s open support for crypto made the week truly historic for the digital assets industry. 

Today’s newsletter highlights all the major crypto developments and also infers how these developments have the potential to reshape the crypto space. Read on to learn more about some of these developments.

Sometimes, a week's worth of progress is spread across a decade, and then suddenly a decade's worth of progress is made in a week! That's exactly the kind of week we had in crypto markets, with three major developments setting the stage for crypto becoming a pivotal topic for the upcoming US elections.

First, in a historic vote in the US House, the first crypto-related legislation FIT21 was passed, with several Democrats breaking party lines to approve the bill aimed at bringing the much-needed reforms for crypto market structures. 

Secondly, the much-awaited spot Ether ETFs were approved for listing by the SEC, but their trading date start remains unclear. 

Last of all, leading US Presidential candidate Donald Trump came out in full support of crypto as an industry and even started accepting crypto donations for his campaign.

Each of these will have a profound long-term positive impact on crypto as a legitimate and regulated asset class. The markets were buoyant in response, surging beyond the $2.7trn level. 

However, the star outperformer for the week was ETH, after the spot ETF approval news sent prices skyrocketing to the $4k level, sustaining over 25% gains for the week. It was after a long time that ETH/BTC ratio inched higher. BTC's market cap dominance fell during the week, even as BTC prices increased modestly to reach closer to the $70k level. 

This is in complete contrast to what's been happening in the recent past when Spot ETH ETF approvals were mostly being dismissed for later this year. We are yet to see the quantum of flows as listing and trading date remain unclear, but overall it is a very positive step for ETH becoming an institutional asset.

The broader markets traded mostly in the green with a few exceptions, but a majority of Ethereum ecosystem tokens saw a surge in prices. Layer 2 scaling solutions on ETH were the direct beneficiaries of the inflow of capital into the Ethereum ecosystem. The entire pack of Layer 2 tokens moved higher in price, with Arbitrum's ARB leading the charge with over 30% gains as it voted on a proposal for a gaming-focused fund. 

Similarly, ETH liquid restaking protocols like Lido and RocketPool saw their tokens surge with LDO jumping by 50% last week. Even the broader DeFi blue chips that are mostly built on Ethereum saw a resurgence in demand, with primary lender AAVE leading the charge. 

Uniswap's UNI too witnessed frantic demand as the UNI token will benefit from the proposal of fee distribution, sending prices 40% higher.

The other sector that enjoys such bouts of volatility, the meme coins, saw tremendous gains in trading volume and subsequently in prices, with PEPE being the leader of the pack and breaking all-time highs to jump over 80% during the week. After initial euphoria around DOGE and SHIB, on account of Musk's tweet about Kabosu's death (the Doge mascot), their price mostly remained flat when compared to the 25% surge in the newer "dog-themed" tokens FLOKI and BONK.

Another token hitting all-time highs was Ondo Finance's ONDO as it's the partner of choice for Blackrock's Real World Asset (RWA) Tokenization plans.

On the flipside, so-called "ETH Killers" like Solana's SOL and Tron's TRX came under some selling pressure as DeFi TVL also shifted away from them in favor of Ethereum. Another token, Arweave's AR saw some profit booking, after weeks of sustained price gains.

• ETH  $3,900 ⏫ 25.64%

• ARB $1.24 ⏫ 26.86% 

• AAVE $109.95 ⏫ 27.52% 

• ONDO $1.20  ⏫ 29.90%

(All data here is as of 3.45 p.m., 27 May 2024)

Before we conclude, here’s a quick look at some important news from around the crypto world.

• The SEC approved spot Ether ETFs in the US on May 23. The SEC greenlit 19b-4 filings from VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise, allowing spot Ether ETFs to be listed and traded. However, ETF issuers still need the SEC's approval of their S-1 registration statements. Read more here. 

• Bitcoin and Ether prices fell in the past 24 hours even as several Ether ETFs were approved for listing on US exchanges. Ether dropped 4% since the approval, CoinGecko data shows. It had risen 20% over the course of a week amid indications of pending approval and updated odds of the ETFs getting approved. Read more here. 

That’s it for now. Thanks for sticking around.

See you later, folks! 👋

Loving the newsletter? Make sure to spread the love and hit share!