(Kitco News) – Crypto enthusiasts had hoped that the launch of nine spot Ethereum (ETH) exchange-traded funds (ETFs) in the U.S. on Tuesday would provide a boost to crypto prices, but instead got a ‘sell-the-news’ reaction from traders as the majority of tokens in the top 200 recorded losses.
Bitcoin (BTC) was no exception to the downturn as bulls put up a good fight to hold support at $66,500, only to see bears overwhelm their efforts and drop King Crypto to $65,500 in the afternoon. Bears now appear emboldened by their progress and the drop in sentiment, setting their sights on support at $65,000.
BTC/USD Chart by TradingView
At the time of writing, Bitcoin trades at $65,740, a decrease of 3.45% on the 24-hour chart.
Stocks also declined in afternoon trading after showing strength in the morning. At the closing bell, the S&P, Dow, and Nasdaq all finished lower, down 0.16%, 0.14%, and 0.06%, respectively.
Markets respond to political shake-up
Tuesday’s price action comes as U.S. markets are attempting to navigate the latest shake-up on the political front after President Joe Biden withdrew from the 2024 Presidential race on Sunday.
While the Democratic National Committee is still working to put forward a plan officially backing a new candidate, Vice President Kamala Harris is projected to have secured enough delegate support to become the Democratic presidential nominee, helping to reduce anxieties over President Joe Biden's withdrawal from the race.
"The market is still awaiting a few key catalysts to take effect,” said Alice Liu, Research Lead at CoinMarketCap. “The market is in ‘wait and see’ mode ahead of Trump's speech at the Nashville Conference on July 25th, where it is anticipated that he may announce BTC to be used in the national reserves. If this does happen, it will trigger a parabolic rise in Bitcoin's price.”
“The market reaction to the spot Ethereum ETF launch has been muted as investors wait to see if it follows the ‘buy the rumor, sell the news’ model,” she added. “However, we have every reason to feel confident. In the first hour, the trading volume for the #ETH spot ETF reached $320 million, compared to $610 million for the #BTC spot ETF during its initial hour. ETH ETFs inflows performance was strong, achieving over 50% of BTC's trading volume in that timeframe.”
“I expect short-term trends in ETH ETF flows to align proportionally with the market cap of Bitcoin ETFs,” said Pat Doyle, blockchain researcher at Amberdata. “This would mean Ethereum does roughly one-third of Bitcoin's volume and flows in a similar timeline.”
“BTC and ETH present distinct value propositions to investors,” he added. “Bitcoin is perceived as digital gold with a fixed supply, serving as an inflation hedge. In contrast, Ethereum is seen more as a technological platform and alternative financial system. Given the current geopolitical uncertainties, Bitcoin will likely continue to be the primary asset of interest. However, in the long term, I believe focus will shift towards Ethereum and other smart contract platforms.”
“Regarding the upcoming election, there are two potential outcomes,” Doyle said. “A Trump victory could expedite the adoption and regulation of cryptocurrencies, whereas a Democratic nominee win will likely advance these developments at a much slower pace.”
According to Taras Kulyk, CEO of Synteq Digital, “The outlook is generally still positive as the likelihood of Harris winning is still exceptionally low. Additionally, the momentum that is growing continuously around Bitcoin’s integration into the wider financial markets has not abated.”
As more people in the U.S. show openness to engaging with cryptocurrencies, Kulyk said, “It seems that the unfriendly Elizabeth Warren and Gensler types are being shown the exit, regardless of whether Harris or Trump is in the White House,” suggesting that “we’ll see a more stable and palatable regulatory environment in 2025 and into the future.”
“A contentious battle would add to the volatility as investors look into their crystal balls and try to forecast value based on who’s up or down a certain day/week/month until the final odds/outcomes are crystallized,” he added. “Regardless of who wins, long term macro signals are all very supportive of Bitcoins ongoing integration.”
Kulyk said Trump still has the backing of “the army of single issue voters in the bitcoin community,” who are “likely reinforced via the extremely strong signaling he’s been putting out to the market,” which improves his odds of winning the election.
“However, this advantage can be rapidly diminished if Harris is equally aggressive in her support towards Bitcoin and regulatory certainty around it,” he concluded. “It’s going to be spicy.”
Altcoins trend lower
It was a red day for the altcoin market as only a dozen tokens in the top 200 managed to post gains in trading on Tuesday.
Daily cryptocurrency market performance. Source: Coin360
Convex Finance (CVX) stood out as the exception, gaining 33.4% to trade at $3.20, followed by a gain of 12% for Ethereum Name Service (ENS), and a 7.3% increase for Helium (HNT). Galaxy (GAL) led the losers with a decline of 24%, while Celestia (TIA) fell 14.3%, and BinaryX (BNX) declined by 13.1%.
The overall cryptocurrency market cap now stands at $2.4 trillion, and Bitcoin’s dominance rate is 54.2%.
