Five Things to Know in Crypto This Week: BTC-Spot ETF Outflows Continue

BTC-Spot ETF Market Faces Third Consecutive Weekly Loss

BTC faced the threat of a fourth consecutive weekly loss on Saturday (April 27). From Monday (April 12) to Saturday (April 27), BTC was down 1.95% to $63,801. Despite the current losses, BTC avoided sub-$60,000.

Market sentiment toward the Fed interest rate trajectory impacted BTC-spot ETF market flow data and BTC price trends.

In the week ending April 26, the BTC-spot ETF market registered total net outflows of $328.0 million. The spot ETF market saw total net outflows of $204.3 million in the week ending April 19. According to Farside Investors,

• Grayscale Bitcoin Trust (GBTC) recorded total net outflows of $454.1 million compared with $458.4 million from the previous week.
• Fidelity Wise Origin Bitcoin Fund (FBTC) registered total net inflows of $19.4 million, down from $93.6 million. Significantly, FBTC saw net outflows on April 24 and April 25, the first since launching on January 11, 2024.
• iShares Bitcoin Trust (IBIT) saw total net inflows of $57.6 million, down from $165.4 million in the week ending April 19. Notably, IBIT ended a 71-day net inflow streak. IBIT saw zero net flows on April 24, April 25 and April 26.
• For the first time since launching on January 11, ARK 21Shares Bitcoin ETF ranked second, with total net inflows of $34.2 million in the week ending April 26.

The BTC-spot ETF market saw total net outflows for the third successive week. Profit-taking from the Bitcoin Halving likely contributed to the outflows. Nevertheless, the spot ETF market saw total net inflows of $11,998.4 million since launch despite GBTC registering total net outflows of $17,184.6 million since January 11.

Crypto Market Under Pressure on Falling Expectations of Multiple 2024 Fed Rate Cuts

The total crypto market cap was down 2.54% to $2,260 billion for the current week, Monday (April 22) to Saturday (April 27). Furthermore, the crypto market faced a possible third consecutive weekly loss.

Shifting investor bets on multiple 2024 Fed interest rate cuts impacted buyer demand for BTC. US durable goods orders (Wed), GDP numbers (Thurs), Michigan Consumer Sentiment numbers (Fri), and the US Personal Income and Expenditures Report reduced bets on a September Fed rate cut. The reports followed hotter-than-expected consumer and producer price numbers from the previous week.

According to the CME FedWatch Tool, the probability of the Fed leaving interest rates unchanged in September increased from 31.6% to 42.6%. Significantly, the chances of the Fed standing pat in September stood at 4.4% on March 26.

Despite shifting sentiment toward the Fed rate path, the Nasdaq Composite Index ended the week up 4.23%. Earnings from Microsoft (MSFT) and Alphabet (GOOGL) countered disappointing results from Meta (META), delivering the Nasdaq gains. Microsoft and Alphabet ended the week up 1.80 and 11.54%, respectively. Meta slid by 7.85%.

SEC vs. Ripple: Opposition Brief and the Ripple Motion to Strike

XRP was outperforming the broader crypto market going into the weekend. From Monday (April 12) to Saturday (April 27), XRP was down 0.08% to $0.5244.

SEC v Ripple case-related activity attracted investor attention throughout the week. Ripple released a redacted version of its opposition brief on Tuesday (April 23). The opposition brief challenged SEC allegations that Ripple continued to breach US securities laws after the December 2020 complaint.

Ripple highlighted that it limited post-complaint XRP sales to ODL sales. Ripple also pointed out that its ODL contracts protect buyers from losses and prevent profits.

The opening brief also cited US case law to argue against the SEC’s push for a $2 billion disgorgement and injunction. These included SEC vs. Govil, where the court ruled the SEC cannot ask for a crippling disgorgement without proving investors suffered actual financial harm. Significantly, the SEC failed to overturn the ruling. The US appellate courts upheld the ruling in April 2024.

Ripple also filed a Motion to Strike on Monday, April 22. The Motion to Strike requested the court to strike SEC submissions supporting its opening brief.

Ripple argued that the SEC provided new testimony and exhibits to support its push for a punitive disgorgement and injunction. SEC enforcement accountant Andrea Fox analyzed Ripple’s financials and other documents to arrive at the $2 billion penalty. The SEC did not disclose the identity of the expert witness or her testimony during discovery.

There are several SEC court filings on the horizon. Next week, the SEC must file its opposition brief to the Motion to Strike. The SEC must also file its reply brief relating to Ripple’s April 22 opposition brief by May 6.

Consensys Sues the SEC over the Classification of Ethereum

On Thursday, April 25, Consensys announced it had filed a lawsuit against the SEC, saying,

“Today, Consensys filed a lawsuit against the Securities and Exchange Commission. The goal behind this is to ensure that Ethereum remains a vibrant and indispensable blockchain platform and to preserve access for the countless developers, market participants, and institutions who have a stake in the world’s second largest blockchain.”

Ethereum co-founder and Consensys founder Joseph Lubin shared the news on X (formerly Twitter), posting,

“Today, Consensys took an important step towards preserving access to ether and by extension the Ethereum blockchain in the US. We are suing the SEC and fighting back against its overzealous regulatory overreach.”

Consensys outlined the reasons for filing the lawsuit, including,

• “The SEC only has jurisdiction over securities and up until recently has declared that ether is not and should not be treated as a security.”
• “The SEC has no authority – nor should it – to regulate the technological evolution of the internet or any basic technology for that matter.”

Consensys made the news in March, sending the SEC a comment letter regarding the ETH-spot ETF applications.

A Consensys victory against the SEC could pave the way to an ETH-spot ETF market.

The news of the lawsuit limited Ethereum’s losses for the current week. ETH was down 0.54% to $3,132 from Monday (April 22) to Saturday (April 27).

Other News

CryptoLaw US founder and candidate for the US Senate, John E. Deaton, filed an Amicus Brief on behalf of 4,701 Coinbase (COIN) customers.

The SEC filed charges against Coinbase in June 2023, alleging Coinbase is operating as an unregistered securities exchange, broker, and clearing agency. Additionally, the SEC charged Coinbase for the unregistered offering and selling of securities in connection with its staking-as-a-service program.

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.