Cryptocurrency Markets Slump Despite Spot Ether ETF Approval

The cryptocurrency market continued its downward trend on Thursday, despite the approval of spot Ether ETFs by the US Securities and Exchange Commission (SEC). The news, announced by SEC Chair Gary Gensler during a Senate hearing, was expected to boost the market, but it had little impact on the prices of major cryptocurrencies.

Ether Leads the Decline

The price of Ether (ETH) initially rose by 1% following the announcement, but it soon reversed its gains, falling by more than 3% in just one hour. At the time of writing, Ether was trading at $3,440, down 5% over the past 24 hours. The broader CoinDesk 20 Index was also lower by 4.9% over the same period.

Cryptocurrency market graph

Bitcoin Follows Suit

Bitcoin (BTC) was also affected, falling by nearly 5% to a one-week low of $66,300. The decline in cryptocurrency prices began on Wednesday afternoon, following the Federal Reserve’s hawkish policy meeting results. The US central bank held its benchmark fed funds rate range steady at 5.25%-5.50%, but surprised with its updated projections suggesting an expectation for just one 25 basis point rate cut in 2024.

Bitcoin price graph

Economic Data Disappoints

The macro mood in crypto was further dampened by disappointing US economic data on Thursday morning. The May Producer Price Index (PPI) fell 0.2% against expectations for a rise of 0.1%. On a year-over-year basis, PPI was higher by 2.2% versus forecasts for 2.5%. Initial jobless claims also rose to nearly a one-year high of 242,000, exceeding expectations of 225,000.

Economic data graph

Analysts Puzzled

Well-followed analyst Skew expressed puzzlement at the market’s failure to sustainably rise despite recent bullish news, including improving inflation data, a Bitcoin-friendly presidential frontrunner in Donald Trump, spot ETH ETF approvals, and other risk asset markets ripping to new all-time highs.

“$66K seems like equilibrium,” said Skew in an X post.

Skew’s post

The cryptocurrency market’s slump has left many analysts and investors scratching their heads, wondering what it will take to spark a sustained rally.