Five Things to Know in Crypto This Week: BTC Sees Red Despite BTC-Spot ETF Inflows

BTC-Spot ETF Market Defies the Hawkish Federal Reserve

BTC was down 4.88% to $67,903 from Monday (April 1) to Saturday (April 6). Significantly, BTC stumbled to a low of $64,589 before steadying.

Hawkish Fed speakers and tighter US labor market conditions impacted buyer demand for riskier assets. FOMC members Thomas Barkin, Neel Kashkari, and Austan Goolsbee countered Fed Chair Powell assurances of a Fed rate cut. Kashkari was the most hawkish, suggesting that the Fed could leave interest rates at 5.5% if inflation doesn’t cool.

The Nasdaq Composite Index fell by 0.80% in the week ending April 5. On Friday, a surge in nonfarm payrolls fueled a 1.24% rally, limiting the damage.

Despite the BTC pullback, the BTC-spot ETF market saw total net inflows for the week ending April 5. Net inflows trended higher, signaling sustained demand as the Bitcoin Halving Countdown Clock ticked lower.

According to BitMEX Research and Farside Investors, the BTC-spot ETF market saw total net inflows of $484.3 million in the week ending April 5. In the previous week, total net inflows were $859.7 million. However, the previous week was a four-day week.

The numbers for the week ending April 5 reflected the influence of more hawkish Fed comments as Grayscale Bitcoin Trust (GBTC) outflows subsided.

Considering the flow data for the main BTC-spot ETF market protagonists,

• iShares Bitcoin Trust (IBIT) saw total net inflows of $811.2 million. (Previous Week: Net inflows of $95.1 million).
• Fidelity Wise Origin Bitcoin Fund (FBTC) saw total net inflows of $395.1 million. (Previous week: Net inflows of $68.1 million).
• ARK 21Shares Bitcoin ETF (ARKB) saw total net outflows of $75.8 million. (Previous week: Net inflows of $27.6 million.
• Grayscale Bitcoin Trust (GBTC) saw total net outflows of $737.8 million compared to total net outflows of $967.1 million in the previous week.

Ripple Announces Plans to Enter the Stablecoin

XRP was down 6.32% to $0.5900 from Monday to Saturday, joining the broader crypto market in negative territory. The total crypto market cap was down 6.12% ($160 billion) to $2,457 billion from Monday to Saturday.

The hefty losses came despite XRP rallying 3.27% on Thursday. News of Ripple planning to enter the stablecoin market delivered the gains. Ripple announced plans to launch a 1:1 US dollar-pegged stablecoin, backed by US dollars, short-term government treasuries, and other cash equivalents. The stablecoin will launch on XRP Ledger (XRPL) and the Ethereum blockchains.

The move into the stablecoin market could open the US market for Ripple, grappling with the ongoing SEC v Ripple case. Investors expect the SEC to appeal the Programmatic Sales of XRP ruling. In July 2023, Judge Analisa Torres ruled that programmatic sales of XRP do not satisfy the third prong of the Howey Test.

An appeal could impact plans to offer its services across the US. Entering the stablecoin market could ease concerns about the outcome of an appeal.

Terraform Labs and Founder Do Kwon Liable for Civil Fraud

A Manhattan jury reportedly found Terraform Labs and founder Do Kwon liable on civil fraud charges. On Friday, the jury agreed with the SEC that Terraform Labs and Do Kwon misled investors about the stability of TerraUSD.

The SEC vs. Terraform Labs case drew significant interest in 2023. In August 2023, Judge Rakoff criticized the Programmatic Sales of XRP ruling from the SEC vs. Ripple case. In December 2023, Judge Rakoff ruled Terraform Labs and Do Kwon breached US securities laws by failing to register TerraUSD and Luna as securities.

Since the December ruling, the SEC has used the Terraform Labs ruling to pursue wins against Coinbase (COIN). The court ruling may also fortify the case for the SEC to appeal against the Programmatic Sales of XRP ruling.

Coinbase vs. Consumers: In Part Reversal of Court Dismissal

On Friday, the US Court of Appeals for the Second Circuit reversed in part and affirmed in part a February 2023 judgment.

Coinbase Chief Legal Officer Paul Grewal responded to the ruling, saying,

“We appreciate the Second Circuit confirming today what is clear under the federal securities law: there’s no private liability for the secondary trading of digital assets on exchanges like Coinbase. Why? Because contracts matter.”

In 2022, Coinbase users filed a claim against the exchange, alleging Coinbase sold 79 tokens illegally as securities. DOGE, SHIB, SOL, and XRP were among the 79 tokens. BTC, ETH, and LUNA were not among the 79 tokens. The filing also alleged that Coinbase operates as an unregistered broker-dealer on the Coinbase exchanges.

In June 2023, the SEC also targeted Coinbase, charging Coinbase for allegedly operating as an unregistered securities exchange, broker, and clearing agency. In March 2024, the court partially granted the Coinbase Motion to Dismiss (MTD). However, the court did not grant the motion to dismiss charges for operating as an unregistered securities exchange.

In the week ending April 5, Coinbase shares declined 9.14% to $240.90.

Ripple Chief Legal Officer Takes a Swipe at the SEC

On Friday, Ripple Chief Legal Officer Stuart Alderoty targeted the SEC. Alderoty referred to a Southern District of New York ruling in another crypto case, saying,

“I don’t know anything about this case, but it seems that other agencies in the US – – here (like SBFraud) the DOJ – – can adequately police crypto fraud without dragging everyone into the SEC’s political quagmire.”

On Wednesday, April 3, the US Attorney’s Office of the Southern District of New York issued a press release headlined,

“Head of Legal and Compliance for Multibillion-Dollar Cryptocurrency Pyramid Scheme OneCoin Sentenced to Four Years in Prison.”