Last week was memorable for the crypto community. Over four months after it approved similar products for Bitcoin, the United States Securities and Exchange Commission (SEC) gave a green signal to the first wave of spot Ethereum exchange-traded funds (ETFs).

According to the latest Bitfinex Alpha report, the crypto market’s reaction to the event was akin to a rollercoaster due to the incidents surrounding the approval. Both bitcoin (BTC) and ether (ETH) experienced significant volatility and sudden price movements as anticipation for the SEC’s decision intensified.

Increasing the Odds of the Approvals

Last week began with market analysts increasing the odds of the approvals from 25% to 75%. The sudden change in sentiment was reflected in key metrics like the Bitcoin Volmex Implied Volatility Index (BVIV), the Ethereum Volmex Implied Volatility Index (EVIV), and the volatility risk premiums (VRPs) for the crypto assets.

These BVIV and EVIV rose to 64 and 85.5, while the Bitcoin VRP and Ethereum VRP spiked to 16 and 34 before falling to 10 and 30, respectively.

Before the tides changed for Ether ETF approvals, the crypto market had been in a period of reduced volatility and relative stability following the Bitcoin halving on April 19. Within this period, the BVIV and EVIV decreased from 75 to 55 and 80 to 63, respectively. Likewise, the VRPs for Bitcoin and Ethereum fell to 1.5 and 8.5, respectively.

As the Fed’s May 1 meeting approached, investor concerns about potential interest rate changes dragged the BVIV, EVIV, and VRPs up again. At this time, the VRPs were as high as 13 and 29.2 for Bitcoin and Ethereum. However, the market stabilized after the Fed’s meeting.

The Effects of the SEC’s Decision

When the SEC finally approved the Ethereum ETFs on May 23, the BVIV and EVIV dropped from 64 and 85.5 to 52.5 and 69.5, respectively, within hours. The VRPs for Bitcoin and Ethereum were not left out, as they also slumped to 7 and 18.

The change in market sentiment was accompanied by a decline in the prices of BTC and ETH, which had rallied to $71,000 and $3,900, respectively, before the approval due to activities in the perpetual futures market. After the initial excitement of the SEC’s decision, investors began to realize their profits, which dragged the prices of the cryptocurrencies even lower.

At the time of writing, BTC and ETH were trading at $68,000 and $3,871 after falling by 1% in the past 24 hours.