Crypto just became a political football, and ether is the early winner

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Crypto is quickly becoming an election issue, and ethereum is the biggest winner so far.

From Monday to Tuesday, ether (ETH-USD) jumped 21% — its best two-day run since January 2021.

But just before the giant surge, the prospects for the next big crypto rally had become shaky.

The government had cooled on approving a suite of spot ether ETFs. Excitement over a similar array of bitcoin ETFs arguably reignited the entire crypto space late last year and provided a continued boost into this year.

The thinking was that widely available crypto ETFs would facilitate crypto adoption by latecomers. Less-crypto-savvy investors could then allocate a “responsible” portion of their 401ks to the new ETFs.

Jim Bianco of Bianco Research just poured cold water on that theory, but it seemed that spot ether ETFs wouldn’t even get their chance at testing the theory. The Securities and Exchange Commission — responsible for overseeing the registration process — had gone silent with the ETF sponsors as a key deadline approached.

Then, “the game changed,” wrote Anthony Pompliano in the Pomp Letter.

On Monday, Bloomberg’s Eric Balchunas and James Seyffart abruptly bumped up their odds of spot ether ETF approval to 75% from 25% after “hearing chatter that the SEC could be doing a 180 on this (increasingly political issue).”

Suddenly, the cogs of bureaucracy improbably began churning again, and the surge in ether prices was underway.

Bitwise Asset Management chief investment officer Matt Hogan joined Yahoo Finance’s Market Domination Wednesday to discuss the developments.

“There has been a real sea change in Washington around crypto,” he said, highlighting recent bipartisan crypto legislation and a newly emerging coalition around stablecoins.

“It looks like Washington has gotten the message that crypto is good for America and that it’s popular with American voters,” he said.

Pomp pointed out that only a week prior, Trump came out as a pro-crypto candidate.

Whether or not the SEC’s flip-flop is related, crypto bulls have been reenergized with the prospect of crypto voters being courted across both sides of the aisle.

“A bunch of people on the internet created a $2.6 trillion industry in the face of government pressure. Imagine what happens when the government is now actively courting these individuals and companies, along with embracing the technology. The headwind becomes a tailwind quickly,” wrote Pomp.

Spoken like a true bull.