July 7 was an important day for the cryptocurrency sector as the Securities and Exchange Commission (SEC) officially acknowledged the filing of a mixed Bitcoin (BTC) and Ethereum (ETH) exchange-traded fund (ETF) listing by Truth Social. More than a crypto stunt, this move arguably gives President Trump’s social media platform a prominent financial valence. But what does this really mean for the crypto space? Let’s dig in!
The SEC acknowledges the crypto ETF application
With the SEC’s acknowledgement of Trump Media’s application for a cryptocurrency ETF, the process for approving or rejecting the listing has officially begun. If approved, the fund will provide exposure to both Bitcoin and Ethereum and will appear on NYSE Arca. 75% of the fund’s holdings will be in Bitcoin and 25% in Ethereum.
Managed by Yorkville America Digital, the crypto ETF will have Foris DAX Trust Company (currently operating as Crypto.com) as its custodian. The digital assets will be held in cold storage and separated from the custodian’s accounts to increase security.
Long-debated in crypto circles, the dual crypto ETF listing marks yet another pivotal point for digital assets. By recognising Trump Media’s Truth Social crypto-backed ETF, the SEC opens the door to further crypto regulation, providing a legitimate way for people to invest and gain exposure to the world’s largest digital currencies by market capitalisation. But how will this impact volatility and future crypto investments? Let’s explore!
One regulated crypto instrument. Twice the diversification
Providing generous exposure to not one but two of the world’s largest cryptos, the BTC ETH ETF will use the CME CF Bitcoin Reference Rate and the Ether Reference Rate for its daily net asset valuation. This way, price movements will be aligned with real-time market movements.
Furthermore, with Crypto.com as acting custodian and Yorkville America Digital backing the exchange-traded fund in terms of compliance and operations, the new crypto investment vehicle offers a solid alternative to both institutional and retail investors.
From the crypto volatility perspective, the ETF could equally well attract big money and the regular crypto punters, which means more liquidity. And more liquidity equals less volatility. So, theoretically, at least, the crypto market could experience some price stabilisation or regulation in the medium to long term.
Yet, as the equilibrium between politics and finance becomes less clear, the degree of unpredictability could increase. On a positive note, the connection between Truth Social and the figure of Donald Trump is undeniable, which makes the BTC ETH ETF a high-profile financial instrument. Hence, it might gain a lot of traction near-term, if approved. Additionally, being tied to Bitcoin and Ethereum could potentially smooth out its volatility compared to a single crypto asset.
Regulatory implications
The SEC’s review process will be crucial and will most likely have rippling effects on crypto prices. Following application acknowledgement, there is a 240-day decision timeline. Throughout this period, SEC experts will analyse the ETF’s structure, custody arrangements, and market impact. This demonstrates how important the role of regulatory compliance is in the crypto space.
It also creates a precedent for what legitimate crypto-based financial product listings should be. Having a clear custody valuation method is central to any such effort. Also, discretionary powers within the product structure should be kept to a minimum. Ultimately, understanding the market, socio-economic, and political context could also help financial players looking to enter the crypto space tremendously going forward.
New Crypto ETF filing
Following hard on the heels of the SEC’s acknowledgement of the dual crypto ETF application, on July 8, Donald Trump’s Truth Social platform filed a new S-1 registration with the SEC for an exchange-traded fund including BTC, ETH, SOL, XRP, and CRO. According to The Coin Republic, the fund’s initial allocation is 70% BTC, 15% ETH, 8% SOL, 5% CRON (Crypto.com’s native token), and 2% XRP.
The ETF will be sponsored by Yorkville America Digital and maintained by Forix DAX Trust, acting as custodian. This new filing puts Trump’s Truth Social on the crypto community’s radar. Likely to attract both institutional and individual investors, the five-crypto ETF is named the Truth Social Crypto Blue Chip ETF and will be traded on NYSE Arca.
As it seeks to provide passive access to crypto markets, the Blue Chip Crypto ETF will track the performance of the digital assets held by the trust. While the ETF shares will offer investors the sought-after exposure to major crypto assets, they will not grant ownership rights.
The crypto markets are sizzling
The biggest gainers of this two-day marathon are Bitcoin and Ether. Bitcoin topped $108,000 on July 9, followed by Ether, which also peaked at $2,663, according to CoinMarketCap.
Solana advanced 1.35% on the daily chart to $154.13 while XRP gained 3.58%, climbing to $2.37. Since the early hours of the European session, these sharp price movements seem to have tempered across most of these digital assets.
Spot crypto exchange-traded funds experienced a similar surge as market participants anticipated an emerging upward trend. July 10 saw a massive investment frenzy that pushed American spot Bitcoin ETFs to unprecedented highs. The total capital inflow channelled into these investment vehicles reached $1.17 billion, with BlackRock’s iShares Bitcoin Trust ETF (IBIT) attracting $448 million and Fidelity’s Wise Origin Bitcoin Fund securing $324 million in investments.
This substantial capital injection coincided with Bitcoin’s resurgent momentum heading into July 11, when the cryptocurrency climbed beyond the $113,800 threshold.
The ripple effect extended to Ethereum spot ETFs, which recorded combined net inflows of $383.1 million on July 10, representing the second-largest single-day capital influx in cryptocurrency ETF history. As the path higher appears to remain wide open for now, traders should practise risk management and pay attention to any market twists and turns.
Knowing this, how are you planning to make the most of this opportunity?
