Key Insights:
- BTC sits in negative territory for the current week, down 2.62% to $42,899.
- The SEC approved 11 BTC-spot ETFs on Wednesday, sending BTC to a high of $49,023 before ETF outflows sent BTC to sub-$42,000.
- Rising bets on an XRP-spot ETF countered SEC v Ripple case-related activity.
Crypto Market Cap Hits Highest Level Since April 2022
The total crypto market cap was up 1.90% to $1,626 billion Monday to Saturday. On Wednesday, the SEC approved the applications for 11 BTC-spot ETFs, driving buyer demand for BTC and altcoins.
However, BTC-spot ETF-related data, increasing US lawmaker scrutiny, and comments from SEC Chair Gary Gensler limited gains for the week.
SEC Approved the First Batch of BTC-Spot ETFs
On Wednesday, the SEC approved the first batch of BTC-spot ETFs. The eleven BTC-spot ETFs included,
Bitwise Bitcoin ETP Trust – BITB
Fidelity Wise Origin Bitcoin Trust – FBTC
iShares Bitcoin Trust – IBIT
ARK 21Shares Bitcoin ETF – ARKB
Franklin Bitcoin ETF – EZBC
Valkyrie Bitcoin Fund – BRRR
Invesco Galaxy Bitcoin ETF – BTCO
VanEck Bitcoin Trust – HODL
Wisdomtree Bitcoin Trust – BTCW
Grayscale Bitcoin Trust – GBTC
Hashdex Bitcoin ETF – DEFI
On day one of trading, Bitwise Bitcoin ETP Trust (BITB) registered the largest inflows, at $237.9 million. Fidelity Wise Origin Bitcoin Trust (FBTC) was close behind, with inflows of $227.0 million. iShares Bitcoin Trust (IBIT) came a distant third, with inflows of $111.7 million.
However, Grayscale Bitcoin Trust (GBTC) saw sizeable outflows. By day two of trading, GBTC saw outflows totaling $579 million.
GBTC outflows impacted buyer demand for BTC on Friday. BTC tumbled 7.57%, ending the day at $42,907. BTC visited a session low of $41,659 before steadying. Monday to Saturday, BTC was down 2.62% to $42,899.
US Lawmakers Gave Mixed Reactions to the BTC-Spot ETF Approvals
Division over cryptos was evident on Capitol Hill mid-week as lawmakers reacted to the SEC approving BTC-spot ETFs.
Senator Elizabeth Warren and Senator Cynthia Lummis sit at opposite ends of the polar vortex regarding cryptos.
On Thursday, Senator Elizabeth Warren had this to say about the SEC approval of BTC-spot ETFs,
“The SEC is wrong on the law and wrong on the policy with respect to the Bitcoin ETF decision. If the SEC is going to let crypto burrow even deeper into our financial system, then it’s more urgent than ever that crypto follow basic anti-money laundering rules.”
In a new anti-crypto drive, Senator Warren called for lawmakers to support the Digital Asset Anti-Money Laundering Act. The bill aims to impose banking-style regulations on the crypto market. Significantly, the bill could give the SEC statutory authority to regulate the crypto space.
Senator Cynthia Lummis issued a contrasting statement about the approvals. Senator Lummis shared an official statement, saying,
“I am thrilled the SEC granted approvals for all 11 bitcoin-spot exchange-traded funds.”
Senator Cynthia Lummis referred to the Lummis-Gillibrand Responsible Financial Innovation Act. Senators Lummis and Kirsten Gillibrand proposed the Responsible Financial Innovation Act in June 2022. The bill aims to water down SEC oversight by giving the CFTC greater regulatory authority.
US Lawmakers Target SEC Chair Gary Gensler over Compromised Account
On Thursday, Chairman of the House Committee on Financial Services Patrick shared a statement about the approval of BTC-spot ETFs, saying,
“Today’s spot Bitcoin ETF approvals mark a historic milestone for the future of the digital asset ecosystem. While action to provide clarity and certainty for digital assets remains necessary, the steps taken today are a significant improvement over regulation by enforcement.”
However, Chair McHenry and other Republican Party members sent SEC Chair Gary Gensler a letter about the account hack. On Tuesday, January 9, the SEC posted an unauthorized tweet. The tweet prematurely announced the approval of BTC-spot ETFs.
BTC reacted to the news, rising to a high of $48,033 before retreating. The SEC stated the account was compromised, sending BTC to $45,016 before steadying.
The House Committee on Financial Services has given the SEC until January 17 to provide a briefing about the unauthorized tweet.
SEC v Ripple and XRP-Spot ETF Chatter
SEC v Ripple Case: On Thursday, the SEC filed a Motion to Compel with the court. The SEC requests Judge Analisa Torres order Ripple to provide 2022-2023 financial statements and post-complaint contracts regarding XRP sales to institutional investors.
The SEC and Ripple are progressing through remedies-related discovery in the ongoing SEC v Ripple case.
Notably, the filing came amidst increasing chatter about the prospects of an XRP-spot ETF. However, uncertainty about an SEC appeal against the Programmatic Sales of XRP ruling could delay the filing of an XRP-spot ETF application.
On Wednesday, SEC Chair Gary Gensler poured cold water on the prospects of a crypto-spot ETF market, saying,
“Importantly, today’s Commission action is cabined to ETPs holding one non-security commodity, bitcoin. It should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities.”
Nonetheless, XRP was up 3.79% from Monday to Saturday despite a 5.35% loss on Friday.
