Five Things to Know in Crypto This Week: Spot ETF Inflows and the US Economy

US Economic Data Signals a Soft Landing

It was a pivotal week for the markets, with US economic indicators calming fears of a hard US economic landing.

In the first half of the week, US inflation figures supported expectations of multiple 2024 Fed rate cuts. Notably, the annual inflation rate fell from 3.0% in June to 2.9% in July.

Through the second half of the week, US jobless claims, retail sales, and consumer sentiment signaled a robust US economy.

• Initial jobless claims fell from 234k in the week ending August 3 to 227k in the week ending August 10.
• Retail sales increased by 1.0% in July after falling by 0.2% in June.
• The Michigan Consumer Sentiment Index rose from 66.4 in July to 67.8 in August.

The stats supported expectations of Fed rate cuts while avoiding the retriggering of US recession fears, a pivotal combination for crypto market trends.

From Monday, August 12, to Saturday, August 17, the total crypto market cap was up 0.90% to $2.032 trillion.

However, the gains were modest relative to the Nasdaq Composite Index, which ended the week up 5.29%. US government BTC movements increased oversupply risks, capping the upside.

BTC Dips Below $57,000 on Oversupply Risk

On Wednesday, August 14, the US government moved 10,000 BTC ($593.5 million) to a Coinbase (COIN) wallet, impacting BTC price trends. The 10,000 BTC originated from the US government’s Silk Road stash. Concerns about a large sell order creating an oversupply imbalance pushed BTC to a low of $56,165 on Thursday, August 15.

BTC reacted similarly in July when the US government transferred $2 billion worth of BTC to two crypto addresses.

On Saturday, August 17, the US government had a 203,239 BTC stockpile, according to Arkham Intelligence. The sizeable stockpile exposes BTC and the broader crypto market to further oversupply risks. Additionally, the US government held 50,224 ETH (130.48 million), 40,285 BNB (20.96 million), and various stablecoins.

Despite the increased oversupply risk, intra-week US BTC-spot ETF flow trends contributed to BTC’s weekly gains.

From Monday, August 12, to Saturday, August 17, BTC was up 0.56% to $59,103.

US BTC-Spot ETF Market Records Weekly Outflows

In the week ending August 16, the US BTC-spot ETF market saw total net inflows of $12.9 million, excluding flow data for iShares Bitcoin Trust (IBIT). The US BTC-spot ETF market saw net outflows of $167.0 million the previous week.

According to Farside Investors:

• Grayscale Bitcoin Trust (GBTC) reported net outflows of $195.2 million in the week ending August 16 (previous week: -$391.8 million).
• ARK 21Shares Bitcoin ETF (ARKB) reported net inflows of $35.9 million.
• Bitwise Bitcoin ETF (BITB) had net inflows of $11.8 million.
• iShares Bitcoin Trust (IBIT) saw net inflows of $50.7 million (Monday to Thursday).
• Fidelity Wise Origin Bitcoin Fund (FBTC) had net inflows of $82.1 million (PW: -$77.1).
• Grayscale Bitcoin Mini Trust (BTC) saw net inflows of $21.6 million.

The positive sentiment toward the US economy and inflows into US BTC-spot ETFs helped counteract the oversupply risks.

SEC vs. Ripple: Chief Legal Officer Talks SEC Appeals

XRP was up 2.10% to $0.5644 from Monday, August 12, to Saturday, August 17.

Ripple Chief Legal Officer Stuart Alderoty discussed the SEC vs. Ripple case and the chances of an appeal in an interview with CryptoLaw.

Significantly, Alderoty addressed speculation about the SEC appealing the Programmatic Sales of XRP ruling, saying,

“XRP’s status as not a security and the secondary market trading of XRP as not security transactions, that is the law of the land, and that does not change even if the SEC appeals.”

However, the market reaction to the comment was relatively muted compared with the response to the July 2023 Programmatic Sales ruling.

In July 2023, XRP surged from sub-$0.50 to a high of $0.9327 in reaction to the Programmatic Sales of XRP ruling. However, XRP retreated to sub-$0.50 by mid-August on fears of an appeal.

The subdued response underscored the confusion about the SEC’s ability to appeal.

Former SEC lawyer Marc Fagel previously commented on the final judgment, saying,

“The SEC won on institutional sales, which were found to violate the law; Ripple won on “programmatic” sales (i.e. sales through third-party intermediaries). It is the latter which the SEC would be appealing (but then Ripple would likely cross-appeal the former).”

Marathon Acquires 4,144 BTC

On Thursday, August 15, Marathon Digital Holdings (MARA) announced the purchase of 4,144 BTC, boosting its bitcoin reserves to 25,000 BTC.

Marathon commented on BTC, saying,

“As we expand our bitcoin holdings, we encourage other institutions – governments, corporations, and organizations alike – to join us in upgrading the global economy through digital capital.”