Daily Market Update: May 21, 2024

May 21, 2024

BTC is currently trading around $71,300 and ETH around $3,800.  Notable gainers in the last 24 hours are LDO, BONK, and PEPE. The global crypto market cap is $2.77T, up 8.6% over the last day.  DeFi Total Value Locked is ~$104b and BTC dominance is around 55%.

ETH is up 23% over the last 24 hours on reports that the US SEC may approve the spot Ethereum ETF applications this week, a stark contrast from recent expectations, including from ETF experts and the issuers themselves, of very low odds of a near-term approval.  It all started when the Bloomberg ETF analysts materially increased their approval odds to 75% and noted “chatter that SEC could be doing a 180” on the issue.  Additionally, it was reported soon after that exchanges are being asked to update 19b-4 filings on an accelerated basis. While approval this week is still not certain and issuers also need the SEC to bless their S-1 registration statements for the ETFs to launch, recent activity is very encouraging in what seemed like a long shot as recently as a day ago.

Many have attributed the sudden apparent about-face on the ETFs as a potential major shift in the US political stance towards crypto.  Specifically, the recent passage with bipartisan support of a measure in both the House and Senate to overturn a controversial SEC crypto custody policy (SAB 121) appears to be the key catalyst, highlighting crypto’s increasing importance in the upcoming election.  If true, many have surmised such a shift in US crypto policy would be more important than the ETF itself.

Lastly, in addition to the potential Presidential veto of SAB 121 discussed yesterday, we’ll get further datapoints on on just how far the political pendulum has swung when the House of Representatives votes on the Financial Innovation and Technology for the 21st Century Act (FIT21) this week.  FIT21, which passed both the House Financial Services and Agricultural Committees with bipartisan support last year, attempts to establish a comprehensive regulatory framework for digital assets in the US, and divides regulatory responsibility between the SEC and CFTC based on various factors, such as the digital asset’s level of decentralization and functionality of its associated blockchain system, how the digital asset is acquired, and who holds the digital asset.  While over 50 crypto companies have voiced support for the bill, it was said (at least until recently) to face an uphill road in the Senate and could be vetoed by the President, making it yet another key gauge of crypto and politics in the US.

Notable news includes: Brazil’s central bank stated intentions to finalize plans for a digital asset regulatory framework by year end; the bipartisan Deploying American Blockchains Act of 2023, which directs the secretary of commerce to take actions to promote the competitiveness of the US in blockchain technology, passed in the House; The American Bankers Association urged House leaders to block the Fed’s CBDC plans; Gemini stated that users of its defunct Earn product will begin receiving ~97% of their frozen digital assets in kind by month end; a consortium led by US billionaire Frank McCourt is one of several bidders interested in acquiring TikTok, with McCourt’s plans including decentralizing the short form video app in part by leveraging Polkadot parachain Frequency; the US spot Bitcoin ETFs recorded their sixth day of consecutive inflows; Goldman Sachs Asset Management executive Peter Mintzberg was appointed CEO of Grayscale Investments; Fidelity updated its Ethereum ETF filing to drop staking; Prometheum launched its Ethereum custody service that treats ETH as a security; Binance pledged support for projects to tackle the low float / high FDV trend; and, Gala Games had $240m worth of tokens swiped via an exploit.

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Brian Rudick, Senior Strategist | TwitterTelegramLinkedIn

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