Five Things to Know in Crypto This Week: BTC-Spot ETF Outflows and the Ripple Case

FOMC Economic Projections Counter Softer US Inflation Trends

Bitcoin (BTC) was down 5.22% to $66,043 from Monday (June 10) to Friday (June 14). Significantly, BTC climbed to a Monday (June 10) high of $70,233 before sliding to a Friday (June 14) low of $65,099.

Investors reacted to US economic data and the FOMC Economic Projections.

More hawkish FOMC Economic Projections overshadowed softer-than-expected US inflation figures, impacting buyer demand for BTC.

The annual inflation rate fell from 3.4% to 3.3%, with core inflation down from 3.6% to 3.4% in May.

However, the FOMC projected Core PCE inflation of 2.8% for 2024, up from 2.6% from the March projections. Moreover, the FOMC raised its Fed Funds Rate projection from 4.6% to 5.1%, signaling a possible single 2024 Fed rate cut.

According to the CME FedWatch Tool, the probability of the Fed standing pat in September decreased from 49.5% to 29.1% in the week ending June 14. The figures reflected the effects of the US CPI Report on sentiment.

However, falling bets on the Fed standing pat in September drove buyer demand for Nasdaq Composite Index-listed stocks. The Nasdaq Composite Index ended the week up 3.24% to 17,689.

US BTC-spot ETF market diverged from the Nasdaq Composite Index. Total net outflows impacted buyer demand for BTC and the broader crypto market.

US BTC-Spot ETF Market Ends Five-Week Net Inflow Streak

The US BTC-spot ETF market ended its five-week net inflow streak in the week ending June 14.

Pre-fed caution set the tone for the week, with the US BTC-spot ETF market seeing total net outflows early in the week. Moreover, the US BTC-spot ETF market reported net outflows after the FOMC Economic Projections.

According to Farside Investors,

• The US BTC-spot ETF market reported total net outflows of $580.6 million in the week ending June 14.
• Grayscale Bitcoin Trust (GBTC) saw total weekly net outflows of $274.3 million. The previous week, GBTC had total net outflows of $31.1 million.
• Fidelity Wise Origin Bitcoin Fund (FBTC) had total weekly net outflows of $146.3 million after inflows of $679.4 million the previous week.
• ARK 21Shares Bitcoin ETF (ARKB) and Bitwise Bitcoin ETF (BITB) saw total weekly net outflows of $149.7 million and $6.5 million, respectively.
• However, iShares Bitcoin Trust (IBIT) bucked the trend, with total weekly net inflows of $41.6 million. In the week ending June 7, IBIT had total net inflows of $948.0 million.

SEC vs. Ripple Case: Ripple Files a Notice of Supplemental Authority

From Monday (June 10) to Friday (June 14), XRP was down 4.76% to $0.4743.

Investor concerns about the SEC vs. Ripple case and SEC plans to appeal against the Programmatic Sales of XRP ruling remained headwinds.

On Thursday, Ripple filed a Notice of Supplementary Authority to support its argument for a $10 million penalty for breaching US securities laws.

Ripple filed the Notice in response to news of the SEC and Terraform Labs agreeing to a punitive disgorgement and civil penalty for breaching US securities laws.

Terraform Labs agreed to pay a $3,586,875,882 disgorgement and a $420,000,000 civil penalty. Ripple highlighted that the civil penalty accounted for almost 1.27% of the defendants’ $33 billion gross sales. Significantly, Ripple argued that the SEC pursued a civil penalty in the Ripple case exceeding the 0.6% to 1.8% range of gross revenues.

Ripple also stated that, unlike the Terraform Labs case, Ripple did not face allegations of fraud, and institutional XRP investors did not face substantial losses.

A court verdict on the penalty Ripple must pay for breaking US securities laws could come at any time. Investors expect the SEC to appeal the Programmatic Sales of XRP ruling after the verdict.

SEC Chair Gary Gensler Gives Testimony on Capitol Hill

On Wednesday, SEC Chair Gary Gensler gave testimony at a Senate Appropriations Subcommittee on Financial Services Hearing.

The SEC Chair stated that ETH-spot ETFs will likely receive approval in the summer.

However, Chair Gensler faced criticism over the lack of a clear crypto regulatory framework.

Senator Hagerty addressed the SEC Chair, saying,

“This industry needs to have a proper ecosystem, so we’re not shoving it offshore.”

The SEC stance on crypto could influence the result of the US Presidential Election. Republican Party front-runner Donald Trump continues to woo the crypto vote after recently voicing his support for digital assets.

Last week, Trump reportedly led US President Joe Biden in key swing states, with the media citing the crypto vote as a contributory factor.

Coinbase (COIN) co-founder and CEO Brian Armstrong visited Capitol Hill, pushing bipartisan support for cryptos. The Coinbase CEO announced meeting more than 12 Senators from both sides of the aisle, highlighting the need for clear crypto rules and consumer protection.

SEC vs. Terraform Labs and Do Kwon Concludes

The SEC vs. Terraform Labs and Do Kwon concluded this week. On Thursday, the SEC announced that Terraform Labs and Do Kwon agreed to pay more than $4.5 billion in penalties after the jury found the defendants liable for securities fraud.

According to the SEC Notice, Terraform Labs agreed to pay $3.59 billion in disgorgement, $467 million in prejudgment interest, and a $420 million civil penalty.

Do Kwon will pay $110 million in disgorgement, $14.3 million in prejudgment interest, and an $80 million civil penalty.

Ripple Chief Legal Officer Stuart Alderoty had this to say about the penalty,

“This SEC is again touting a big penalty – but the SEC actually will end up a creditor in bankruptcy court (see BlockFi). The SEC has become a show regulator chasing headlines rather than good policy.”