Five Things to Know in Crypto This Week: US Jobs Report Offers Relief

BTC-Spot ETF Market Eyes Fourth Week of Outflows

BTC needs a positive weekend to avoid a fifth consecutive weekly loss.

From Monday (April 29) to Saturday (May 4), BTC was up 0.01% to $63,173. Significantly, BTC fell to a May 1 low of $56,551 before retaking the $63,000 handle.

The market reaction to the FOMC press conference and US Jobs Report impacted US BTC-spot ETF market flow trends and buyer demand for BTC.

In the week ending May 3, the US BTC-spot ETF market saw total net outflows of $433 million. Significantly, US BTC-spot ETFs recorded total net outflows for the fourth consecutive week.

According to Farside Investors,

• Grayscale Bitcoin Trust (GBTC) saw total net outflows of $277.2 million, compared with $454.1 million from the previous week.
• iShares Bitcoin Trust (IBIT) recorded total net outflows of $24.2 million in the week ending May 3, the first since launch.
• Fidelity Wise Origin Bitcoin Fund (FBTC) saw total net outflows of $130.7 million. Significantly, FBTC saw a weekly outflow for the first time since launching on January 11, 2024.
• ARK 21Shares Bitcoin ETF (ARKB) registered total net outflows of $84.4 million in the week ending May 3.
• Franklin Bitcoin ETF (EZBC), Invesco Galaxy Bitcoin ETF (BITCO), Valkyrie Bitcoin Fund (BRRR), and VanEck Bitcoin Trust (HODL) recorded net inflows in the week ending May 3.

The weak demand environment continued overshadowing the Bitcoin Halving effects on the supply-demand dynamic. Market sentiment toward the Fed rate path influenced the buyer appetite for Bitcoin-spot ETFs. The FOMC press conference sent BTC to the May 1 low, while the US Jobs Report refueled buyer demand for spot ETFs.

The FOMC Press Conference vs. the US Jobs Report

The total crypto market cap was down 0.57% to $2,271 billion for the current week, Monday (April 29) to Saturday (May 4).

Investors reacted to the FOMC press conference on May 1, sending the total crypto market cap to a Wednesday (May 1) low of $2,129 billion. Fed Chair Powell warned there was insufficient progress in bringing inflation to the 2% target.

The warning supported fading investor bets on multiple 2024 Fed interest rate cuts. However, the Fed Chair poured cold water on speculation about a Fed interest rate hike.

On Friday (May 3), the US Jobs Report fueled buyer demand for riskier assets. The total crypto market cap rallied 5.35%, reversing a 4.95% loss from Wednesday (May 1).

Average hourly earnings increased by 3.9% year-on-year in April after rising by 4.1% in March. Economists forecast average hourly earnings to advance by 4.0%. Nonfarm payrolls increased by 175k in April after a 315k surge in March. Economists forecast a 243k increase in nonfarm payrolls.

The weaker-than-expected numbers reignited investor bets on a September Fed rate cut.

US Service sector data also influenced investor expectations on a September Fed rate cut. The all-important ISM Services PMI fell from 51.4 to 49.4 in April.

According to the CME FedWatch Tool, the probability of the Fed leaving interest rates at the 5.25-5.50% target rate fell from 42.6% to 32.6% in the week ending May 3.

In contrast, the Nasdaq Composite Index ended the week up 1.43%. Apple Inc. (AAPL) was among the names that released quarterly earnings results. Apple Inc. ended the week up 8.32%.

Nasdaq-listed crypto firms also released corporate earnings results in the week ending May 3.

MicroStrategy and Coinbase Delivered Contrasting Earnings Results

On Monday (April 29), MicroStrategy (MSTR) released earnings results, leaving the share price in negative territory for the week. MicroStrategy reported an earnings per share of -$8.26 vs. a consensus EPS of -$0.55. Sales fell by 5.2% year-on-year, leaving revenue at $115.25 million.

MicroStrategy ended the week down 4.63% to $1,223.01.

In contrast, Coinbase (COIN) released impressive quarterly earnings results. Coinbase reported an EPS of $4.40 vs. a consensus EPS of $1.28, delivering a 244.83% upside surprise. The January 11 launch of the US BTC-spot ETF rebooted buyer demand for cryptos, sending total revenue up 72% quarter-on-quarter to $1.6 billion.

Nevertheless, Coinbase shares trended downwards despite the earnings results. In the week ending May 3, Coinbase declined by 5.53% to $223.25. A deterioration in crypto market conditions through April could adversely impact Coinbase earnings for Q2 2024. The total crypto market was down 13.48% in early Q2 2024 (April 1 – May 4) compared with a 63.05% gain through Q1 2024.

SEC vs. Ripple: Activity Heated Up Before the May 6 Reply Brief

XRP outperformed the broader crypto market from Monday (April 29) to Saturday (May 4), advancing by 4.08% to $0.5309.

SEC v Ripple case-related activity warranted investor attention as Ripple and the SEC navigated the remedy-related part of the case.

On Monday (April 29), the SEC filed an opposition brief to Ripple’s Motion to Strike.

Ripple filed the Motion to Strike testimony from SEC enforcement accountant Andrea Fox. The SEC included testimony and exhibits (the Fox Declaration) in its remedy-related opening brief. Significantly, the SEC used the testimony and exhibits to argue for an almost $2 billion penalty and an injunction.

The court must decide whether the Fox Declaration introduced new evidence and if Fox is an expert or a summary witness. Ripple has argued that the SEC did not provide her name and testimony during discovery and could not depose her. The SEC contended that Andrea Fox was a summary witness and did not disclose new testimony.

On Thursday, Ripple filed its Motion to Strike-related reply brief. Ripple argued that the Fox Declaration summarized Ripple’s financial statements and introduced new testimony. Significantly, Ripple contested that it did not have the opportunity to depose Andrea Fox.

Various outcomes are possible. Considering the late stage of the case, the court may decline the Motion to Strike but allow Ripple to depose Andrea Fox.

While the Motion to Strike ruling will draw interest, the focal point remains on the outcome. The SEC must file its remedy-related reply brief by Monday (May 6), after which time the court will deliver its ruling on the penalty for breaching US securities laws.

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