Five Things to Know in Crypto This Week: BTC-Spot ETF Inflows Surge Despite BTC Losses

BTC-Spot ETF Market: Record Net Weekly Inflows Despite BTC Losses

BTC was down 4.44% to $65,989 from Monday (Mar 11) to Sunday (Mar 17). Significantly, BTC struck a Thursday (Mar 14) all-time high of $73,808 before sliding back to sub-$66,000.

Nonetheless, the BTC-spot ETF market saw net weekly inflows of $2,565.7 million in the week ending Mar 15. (BTC-spot ETF market data sourced from BitMEX Research and Farside Investors).

It was a pivotal week for the BTC-spot ETF market.

• The BTC-spot ETF market saw weekly net inflows reach a record high and a single-day high.
• iShares Bitcoin Trust (IBIT) powered through the week with net inflows of $2,483.6 million.
• Grayscale Bitcoin Trust (GBTC) net outflows remained elevated. Outflows fell from $1,654.4 million (week ending Mar 8) to $1,246.1 million (week ending Mar 15).
• Fidelity Wise Origin Bitcoin Fund (FBTC) saw net inflows fall from $1,339.6 million to $717.9 million week-on-week.

Bloomberg Intelligence Senior ETF Analyst Eric Balchunas highlighted the impressive start to the BTC-spot ETF market. Balchunas shared an ETF table by category, placing BTC-spot ETFs far above the rest of the field. Significantly, BTC and gold (XAU/USD) reached all-time highs, while gold ETFs saw outflows of $5,018 million year-to-date.

Source: Daily Chartbook

MicroStrategy Surged 25% on Fund-Raising News

MicroStrategy (MSTR) surged 25.03% in the week ending Mar 15. MSTR outperformed BTC (-4.44%) and NVIDIA (NVDA), which gained 0.35% in the week ending Mar 15. The Nasdaq Composite Index declined by 0.70% in the week ending Mar 15.

On Monday (Mar 11), MicroStrategy announced the acquisition of 12,000 BTC for approximately $821.7 million. The firm used proceeds from convertible notes and cash holdings, taking the total hoard to 205,000 BTC.

With the Bitcoin halving event approaching, MicroStrategy revealed plans to acquire more BTC in the coming sessions. On Wednesday, MicroStrategy founder and Chairman Michael Saylor proposed a $500 million private offering of convertible senior notes. The offering was the second in two weeks.

Coinbase, the SEC, and the Ruling Making Petition

On Monday (Mar 11), Coinbase (COIN) Chief Legal Officer Paul Grewal provided updates on the rejected SEC rulemaking petition. Significantly, Coinbase filed an opening brief in the 3d Circuit challenging the denial of the rulemaking petition.

Coinbase took the opportunity to question the SEC’s authority over the US digital asset space.

In Aug 2023, Coinbase filed a Motion to Dismiss (MTD), arguing the SEC lacks the statutory authority to regulate crypto exchanges. If Judge Katherine Failla grants the MTD, the SEC may have to end its reign of regulation through enforcement.

Judge Failla could rule on the MTD at any time. Coinbase and the SEC delivered oral arguments on Jan 17. Legal experts believed Coinbase delivered a better explanation of an investment contract, raising the chances of a positive outcome for the crypto industry.

However, Coinbase shares stumbled in the week ending Mar 15, sliding 5.56% to $242.36. The losses aligned with the crypto market pullback through the second half of the week. From Monday (Mar 11) to Sunday Mar 17, the total crypto market cap was down 3.88% to $2,434 billion.

SEC v Ripple, SEC Plans to Appeal, and XRP-Spot ETFs

XRP was down just 0.07% to $0.6083 from Monday (Mar 11) to Sunday (Mar 17). The loss was modest despite lingering uncertainty about the eventual outcome of the SEC v Ripple case.

On conclusion of the SEC v Ripple case, the SEC can appeal against the Programmatic Sales of XRP ruling. SEC plans to appeal against the Programmatic Sales ruling remains an XRP headwind.

The SEC will unlikely approve XRP-spot ETF applications until the conclusion of the appeals process. Legal experts think an appeal could extend the SEC v Ripple case into 2025.

Hopes of an XRP-spot ETF market took another hit in the week. US Senators Jack Reed and Laphonza Butler co-signed a letter to SEC Chair Gary Gensler, calling on the SEC to restrict the evolution of the crypto-spot ETF market.

The Senators, both Democrats, called on the need to safeguard retail investors from thinly traded cryptos and pump-and-dump schemes. In the letter, the Senators highlighted the vulnerability of cryptos to fraud and manipulation.

In Nov 2023, XRP struck a high of $0.7503 on fake news of a BlackRock (BLK) XRP-spot ETF application.

US Inflation Numbers Reduced Bets on an H1 2024 Fed Rate Cut

On Thursday (Mar 14), hotter-than-expected US producer prices for Feb reduced bets on an H1 2024 Fed rate cut. US producer prices increased by 1.6% year-on-year. In Jan, US producer prices were up 1.0%.

According to the CME FedWatch Tool, the chances of a 25-basis point May Fed rate cut fell from 23.2% to 6.4% in the week ending Mar 15. The probability of the Fed leaving interest rates at 5.50% in June increased from 26.6% to 41.2%.

BTC responded to the February numbers, sliding to a Thursday low of $68,554 before retaking the $71,000 handle.

However, BTC saw losses extend into Friday (Mar 15) and Saturday (Mar 16). BTC slid to a Saturday low of $64,909 before steadying.