Five Things to Know in Crypto This Week: ETH-Spot ETFs and BTC-Spot ETF Inflows

US BTC-Spot ETF Market Inflow Streak Extended to Three Weeks

BTC struck a Tuesday (May 21) intraweek high of $71,287 before retracing to sub-$70,000 on Fed jitters. From Monday (May 20) to Saturday (May 25), BTC was up 3.74% to $68,723.

The US BTC-spot ETF market saw ten consecutive days of total net inflows and a three-week net inflow streak.

In the week ending May 24, the US BTC-spot ETF market recorded total net inflows of $1,056.7 million, up from $948.3 million during the previous week.

According to Farside Investors,

• Grayscale Bitcoin Trust (GBTC) saw total net outflows of $20.5 million in the week ending May 24. GBTC saw total net inflows of $12.3 million in the week prior.
• iShares Bitcoin Trust (IBIT) returned to the top of the leaderboard, with total net inflows of $719.5 million (previous week: +$131.8 million).
• Fidelity Wise Origin Bitcoin Fund (FBTC) had total net inflows of $227.2 million, down from total net inflows of $344.5 million in the week ending May 17.
• ARK 21Shares Bitcoin ETF (ARKB) ranked third, with total net inflows of $77.9 million, down from $243.7 million.
• Seven of the Ten issuers recorded total net inflows in the week ending May 24.

Inflows trended lower in the second half of the week as investors reacted to the US economic calendar.

FOMC Meeting Minutes and the US Services PMI Spook Investors

From Monday (May 20) to Saturday (May 25), the total crypto market cap was up 6.31% ($147.34 billion) to $2,481 billion.

US BTC-spot ETF market flow trends drove buyer demand for BTC and the broader crypto market.

The total crypto market cap rose to a Tuesday (May 21) high of $2,598 billion before retreating. On Wednesday (May 22), the FOMC Meeting Minutes surprised investors. The Minutes showed the Fed remained willing to hike interest rates to return inflation sustainably to target.

US service sector PMI numbers delivered a second blow to the crypto market on Thursday (May 23). The S&P Global Services PMI unexpectedly jumped from 51.3 to 54.8 in May, reducing investor bets on a September Fed rate cut. Nevertheless, the markets remained hopeful the Fed would not hike rates despite the Minutes and the PMI numbers.

According to the CME FedWatch Tool, the chances of the Fed standing pat in September increased from 35.2% to 49.3% in the week ending May 24. On Friday (May 24), there was a 0.4% probability of a 25 basis point September Fed rate hike compared with zero in the previous week.

SEC Approves 19b-4 Filings for ETH-Spot ETFs

The SEC approved the first 19b-4 application for an ETH-spot ETF on Thursday (May 23). On Thursday, VanEck responded swiftly to the approval, submitting its S-1 form for approval. The Thursday approval was a significant step toward an ETH-spot ETF market. Nevertheless, the VanEck Ethereum ETF cannot launch until the SEC approves the S-1 form.

Bloomberg Intelligence ETF Analyst James speculated political pressure from the White House forced the SEC into an unexpected U-turn on ETH-spot ETFs.

From Monday (May 20) to Saturday (May 25), ETH was up 21.16% to $3,721.

SEC vs. Ripple and XRP-Spot ETF Prospects

A full approval and launch of an ETH-spot ETF could pave the way to an XRP-spot ETF market. SEC Chair Gary Gensler publicly labeled ETH as a security after the Merge. In July 2023, the US courts ruled that programmatic sales of XRP do not satisfy the third prong of the Howey Test.

Filings for XRP-spot ETFs could hinge on SEC plans to appeal against the Programmatic Sales of XRP ruling. The ongoing SEC vs. Ripple case is in its final stages. The parties await a court ruling on omnibus sealing motions, at which time the court can begin deliberations.

In July 2023, Judge Analisa ruled that Ripple breached US securities laws for failing to register XRP as a security in sales to institutional investors.

The SEC pursued an almost $2 billion penalty and an injunction, prohibiting Ripple from selling XRP to institutional investors. Ripple presented its rebuttal to the opening brief, arguing that the penalty should not exceed $10 million. Ripple anticipates a court ruling in the coming months.

The SEC can appeal against the Programmatic Sales ruling at the end of the case, a lingering XRP headwind.

From Monday (May 20) to Saturday (May 25), XRP was up 5.03% to $0.5347.

Other News

Kabosu, the Shiba Inu dog inspiring Dogecoin (DOGE) died this week. Aya Miyaguchi from the Ethereum Foundation posted,

“Kabosu passed this morning. I met her exactly 10 years ago in May 2014. She was always more than the DOGE dog to me, but a great friend who led to many amazing memories, like her Devcon debut in Osaka. Her NFT campaign resulted in the donation of all $4M in proceeds to help build schools in developing countries, thanks to her owner Atsuko. Kabosu inspired the most joyful meme, and our sacred friend reminded us why we joined this community. Thank you Kabo-chan. RIP.”