Five Things to Know in Crypto This Week: Fed Bets and ETF Outflows Shake Confidence

Fed Rate Path Uncertainty Triggers Crypto Market Cap Drop

This week, the global markets focused on the US economy. Fears of a US hard economic landing subsided. Key economic indicators included:

• CB Consumer Confidence Index increased from 101.9 in July to 103.3 in August.
• US economy grew by 3.0% in Q2 2024, up from a preliminary expansion of 2.8%.
• Initial jobless claims fell from 233k in the week ending August 17 to 231k in the week ending August 24.
• Personal income rose by 0.3% in July after an increase of 0.2% in June.
• Personal spending increased by 0.5% in July, up from 0.3% in June.
• The Core PCE Price Index remained unchanged at 2.6% in July.

While the stats eased fears of a US recession, investors also cut bets on a 50-basis point September Fed rate cut. According to the CME FedWatch Tool, the probability of a 50-basis point rate cut fell from 36.0% (August 23) to 30.0% (August 31).

Falling odds on a 50-basis point Fed rate cut impacted crypto demand. From Monday, August 26, to Saturday, August 31, the total crypto market cap was down 7.66% to $2.038 billion.

US BTC-spot ETF Flow Trends and BTC Demand

Uncertainty about the Fed’s September interest rate decision also impacted buyer appetite for US BTC-spot ETFs.

According to Farside Investors, the US BTC-spot ETF market could see total net outflows for the first time in three weeks.

For the week ending August 30, notable flows included:

• Grayscale Bitcoin Trust (GBTC) saw net outflows of $119.2 million in the week ending August 30 (previous week: -$86.8 million).
• ARK 21Shares Bitcoin ETF (ARKB) had net outflows of $221.0 million (PW: +$83.5 million).
• Fidelity Wise Origin Bitcoin Fund (FBTC) saw net outflows of $62.7 million (PW: +$87.8 million).
• From Monday to Thursday, iShares Bitcoin Trust (IBIT) had net inflows of $210.6 million.
• The US BTC-spot ETF market reported total net outflows, excluding Friday’s flow data from IBIT, of $277.2 million (PW: +$506.4 million).

Overall, nine of the eleven issuers recorded net outflows for the week ending August 30, reflecting uncertainty about the Fed rate path. US BTC-spot ETF market outflows impacted BTC demand.

Monday, August 26, through Saturday, August 31, BTC was down 7.60% to $59,217.

US ETH-spot ETF Market Outflows Continue

The US ETH-spot ETF market continued to experience outflows in the week ending August 30.

According to Farside Investors, the US ETH-spot ETF market reported total net outflows of $12.4 million in the week ending August 30, excluding Friday’s iShares Ethereum Trust (ETHA) flows. Although Wednesday marked the end of a nine-day outflow streak, the ETH-spot ETF market has seen a cumulative net outflow of $477.4 million since its launch.

US ETH-spot ETF market outflows continued to impact ETH demand. From Monday, August 26, to Saturday, August 31, ETH was down 8.19% to $2,524.

SEC Targets OpenSea NFT Marketplace

On August 28, the US Securities and Exchange Commission (SEC), alleging that Non-Fungible Tokens (NFTs) on its marketplace are securities.

OpenSea co-founder and CEO Devin Finzer shared the news, stating,

“We’re shocked the SEC would make such a sweeping move against creators and artists.”

The agency followed up with a post on X, formerly Twitter, warning,

“Scammers often use innovations and emerging technologies like crypto to perpetrate investment scams. Learn about five ways fraudsters may lure victims into scams involving crypto asset securities.”

The SEC targeted the US digital asset space as the US primaries loom. Senator Elizabeth Warren faces John E. Deaton, which could significantly impact the US crypto regulatory environment.

Senator Warren proposed the Digital Asset Anti-Money Laundering Act, aiming to stifle the crypto industry with banking-style anti-money laundering (AML) and countering the financing of terrorism (CFT) frameworks.

In contrast, John E. Deaton played a pivotal role in the Programmatic Sales of XRP ruling, representing 75,000 XRP holders in the SEC vs. Ripple case.

SEC vs. Ripple: XRP in Limbo

The latest SEC assault on the US crypto industry came as investors await the agency’s next move in the Ripple case. Ripple and the SEC have a 60-day window from the final judgment date to file an appeal, leaving XRP in limbo.

XRP was down 5.56% to $0.5672 from Monday, August 26, to Saturday, August 31. Ongoing uncertainty about SEC plans to appeal left XRP drifting below the crucial $0.60 level.