Five Things to Know in Crypto This Week: Oversupply, ETF Outflows, Ripple Settlement News

BTC Under Pressure as Oversupply Risk Intensifies

Bitcoin (BTC) was down 9.69% to $61,642 from Monday, July 29 to Saturday, August 3.

On Monday, July 29, investors reacted to news of the US government transferring $2 billion of BTC to crypto wallets. The $2 billion transfer coincided with Mt. Gox transfers to its trustee crypto exchanges to repay creditors.

On Friday, oversupply risk intensified as Genesis Trading began repaying its creditors.

Arkham Intelligence detailed the BTC and ETH transfers to creditors, saying,

“Wallets linked with Genesis Trading have moved 16.6K BTC ($1.1B) and 166.3K ETH ($521.1M) in the past hour – likely for in-kind repayments to creditors.”

Genesis plans to repay approximately $4 billion in fiat and digital currencies to its creditors. Mt. Gox intends to repay about $9 billion to its creditors.

Other factors likely contributing to the BTC sell-off included fears of a US economic recession and US BTC-spot ETF market flow trends.

US Labor Market Data Rekindles Fears of a US Hard Landing

On Friday, August 2, the US Jobs Report intensified fears of a US economic hard landing.

The US unemployment rate unexpectedly increased from 4.1% in June to 4.3% in July, signaling a possible slump in private consumption.

A deteriorating labor market could affect wage growth and consumer confidence, curbing consumer spending. With private consumption contributing over 60% to the US economy, a pullback in spending could adversely affect the US economy.

Average hourly earnings increased by 3.6% year-on-year in July, down from 3.8% in June.

US labor market data weighed more heavily after Powell’s focus on labor market conditions during the FOMC Press Conference. Powell said he does not want further deterioration in the labor market.

US BTC-Spot ETF Market Ends Four-Week Inflow Streak

US BTC-spot ETF market flow trends for the week ending August 2 reflected the shift in BTC demand.

According to Farside Investors:

• Grayscale Bitcoin Trust (GBTC) saw net outflows of $245.1 million in the week ending August 2 (previous week: -$48.9 million).
• Fidelity Wise Origin Bitcoin Fund (FBTC) had net outflows of $192.9 million (PW: +$29.6).
• ARK 21Shares Bitcoin ETF (ARKB) Bitwise Bitcoin ETF (BITB) reported net outflows of $122.6 million and $77.1 million, respectively.
• Grayscale Bitcoin Mini Trust (BTC) saw net inflows of $219.0 million.
• iShares Bitcoin Trust (IBIT) reported net inflows of $327.4 million from Monday to Thursday.

Excluding Friday’s flow data for iShares Bitcoin Trust (IBIT), the US BTC-spot ETF market saw total net outflows of $123.3 million in the week ending August 2.

Significantly, the US BTC-spot ETF market could end its four-week net inflow streak,

Ethereum (ETH) Drops Below $3,000 on ETH-Spot ETF and Supply Trends

Ethereum (ETH) was down 9.61% from Monday, July 29, to Saturday, August 3.

ETH tracked the broader market into negative territory, with US recession jitters impacting demand for riskier assets.

Genesis Trading’s repayment plans contributed to the weekly losses, with the US ETH-spot ETF market unlikely to absorb the oversupply.

The US ETH-spot ETF market faces total net outflows in the week ending August 2

According to Farside Investors:

• Grayscale Ethereum Trust (ETHE) saw total net outflows of $603.0 million.
• iShares Ethereum Trust (ETHA) had total net inflows of $270.8 million (excluding flow data for Friday).
• Fidelity Ethereum Fund (FETH) reported net inflows of $77.7 million, while Grayscale ETH Mini Trust (ETH) saw total net inflows of $36.8 million.

Excluding Friday’s flow data for ETHA, the US ETH-spot ETF market saw total net outflows of $115.1 million for the week ending August 2.

SEC vs. Ripple: Settlement Hopes Fueled XRP Volatility

XRP was down 7.12% to $0.5595 from Monday, July 29, to Saturday, August 3.

While joining the broader crypto market in negative territory, hopes of an SEC vs. Ripple settlement limited the losses.

The SEC scheduled a Closed Meeting for August 8 after canceling an August 1 meeting. According to the Sunshine Act Notice, agenda items include institution and settlement of injunction actions, possibly referring to the Ripple case.

In March 2024, the SEC filed its remedies-related opening brief, arguing for a $2 billion penalty and an injunction prohibiting XRP sales to institutional investors.

A settlement could boost XRP demand. Ripple will unlikely accept settlement terms that include an injunction. Moreover, a settlement would end SEC plans to appeal against the Programmatic Sales of XRP ruling.

In July 2023, Judge Analisa ruled that programmatic sales of XRP do not satisfy the third prong of the Howey Test. The ruling fueled an XRP rally to a 2023 calendar year high of $0.9327. However, fears of an SEC appeal dragged XRP to sub-$0.45. A settlement could spur an XRP return to $1.00.