Crypto Markets Brace for Selloff Amidst Regulatory Shifts and Key Ecosystem Developments
Crypto Markets Brace for Selloff Amidst Regulatory Shifts and Key Ecosystem Developments
The crypto market experienced a significant selloff with majors like Bitcoin and Ethereum seeing notable price declines. Bitcoin briefly fell below $90,000, wiping out its 2025 gains, while Ethereum also dipped. In contrast, some altcoins like ICP, ASTR, and HYPE saw positive gains. On the regulatory front, the US Treasury Department clarified that national banks can now hold crypto on their balance sheets for specific purposes, a positive step for institutional integration. However, the authenticity of El Salvador's reported $100 million Bitcoin purchase was questioned, with the IMF citing past increases as internal transfers. Despite market volatility, Cboe launched new Bitcoin and Ethereum futures, and the Ethereum Foundation initiated a privacy-focused project. Prominent analyst Tom Lee expressed strong optimism for Ethereum's future, highlighting its increasing leverage by financial institutions.
Regulatory Clarity and Institutional Holdings
The US Treasury Department's Office of the Controlled of the Currency (OCC) has provided crucial guidance, stating that national banks are now permitted to hold cryptocurrencies on their balance sheets. This allows banks to cover network gas fees and engage in other crypto-related experiments, marking a significant step towards broader institutional acceptance.
Market Selloff Hits Majors, Altcoins Show Resilience
Despite some positive regulatory news, the broader crypto market saw a notable selloff, with major cryptocurrencies experiencing significant price corrections. Bitcoin (BTC) briefly dipped below $90,000, wiping out its 2025 gains and falling to $91,300, a 4% decline. Ethereum (ETH) also suffered, down 5% to $3,050, while BNB and SOL saw drops of 2% and 3% respectively. Market sentiment, as reflected by the Crypto Fear & Greed Index, remained in "extreme fear" for the sixth consecutive day. In contrast to the majors, several altcoins posted strong gains, with ICP climbing 9%, ASTR up 7%, and HYPE increasing by 5%.
Adding to market infrastructure, Cboe unveiled "continuous" Bitcoin and Ethereum futures with 10-year terms, offering a new long-term derivative option. Meanwhile, Japan announced a significant change to its crypto tax rules, reducing capital gains tax from 55% to 20%, a move expected to be favorable for investors.
Bitcoin's El Salvador Saga and Future Taxation
Questions arose regarding a reported $100 million Bitcoin purchase by El Salvador, a claim which the International Monetary Fund (IMF) subsequently countered, insisting that past reported increases were internal transfers rather than fresh acquisitions. Separately, the White House is reportedly considering proposals to empower the IRS to track and tax crypto holdings on foreign exchanges, potentially increasing tax scrutiny for US investors.
Ethereum's Privacy Push and Institutional Outlook
Ethereum continued to push forward with ecosystem developments. Vitalik Buterin and the Ethereum Foundation launched "Kohaku," a new initiative aimed at integrating enhanced privacy and security features directly into Ethereum wallets, rather than relying on external add-ons. Fundstrat Global Advisors’ Head of Research Tom Lee shared a highly positive outlook on Ethereum's future, noting that the asset is increasingly being leveraged by crypto treasury firms and a growing number of traditional financial institutions, underscoring its expanding utility and adoption.