SEC Appeal Impacts XRP While US BTC-Spot Inflows Surge – In Crypto This Week

US Economic Indicators Boost November Fed Rate Cut Hopes

This week, US economic indicators strengthened investor bets on a 25-basis point Fed rate cut in November. Furthermore, the data aligned with expectations for a soft US economic landing, driving demand for riskier assets, including crypto.

Key stats included:

• Initial jobless claims: 241k (week ending October 12), down from 260k (week ending October 5).
• Retail Sales: +0.5% in September, up from +0.1% in August.

A resilient US labor market could support wage growth, boost spending, and drive inflation. However, private consumption is crucial for the US economy as it contributes over 60% to GDP. A soft US landing and a 25-basis point Fed rate cut are more favorable for the crypto market than a 50-basis point rate cut and a hard landing.

According to the CME FedWatch Tool, the probability of a 25-basis point November Fed rate cut increased from 89.5% to 90.4% in the week ending October 18. The chances of a 25-basis point Fed rate cut to 4.25 – 4.50% in December stood at 76.8% (October 18), down from 84.4% (October 11).

Market Performance: Crypto Outperforms Nasdaq

Notably, the Nasdaq Composite Index extended its winning streak to six consecutive weeks, rising by 0.80% to 18,490. However, the crypto market outperformed the Nasdaq, advancing by 6.96% to a total market cap of $2.294 trillion from Monday, October 14, to Saturday, October 19.

US BTC-spot ETF Market Sees Inflows Surge

The US BTC-spot ETF market recorded its largest weekly inflows since March 2024, driving BTC demand. According to Farside Investors, the US BTC-spot ETF market had total net inflows of $2.129.6 billion (excluding Valkyrie Bitcoin Fund flows for October 18) in the week ending October 18, a marked increase from $348.5 million the previous week.

Notable inflows came from:

• iShares Bitcoin Trust (IBIT) had net inflows of $1,141.1 million. (Previous week: +$140.6 million).
• Fidelity Wise Origin Bitcoin Fund (FBTC) saw net inflows of $318.8 million. (PW: -$138.2 million).
• ARK 21Shares Bitcoin ETF (ARKB) had net inflows of $306.1million (PW: +$35.4 million).
• Bitwise Bitcoin ETF (BITB) reported inflows of $149.8 million. (PW: +$35.7 million).

Ten out of eleven issuers, including Grayscale Bitcoin Trust (GBTC), registered net inflows, supporting a BTC move toward $70,000. From Monday, October 14, through Saturday, October 19, BTC advanced by 9.16% to $68,372.

US Presidential Election Fuels Crypto Demand

On Monday, October 14, US Vice President Kamala Harris outlined her Opportunity Agenda for Black Men, giving assurances to crypto investors. The Agenda stated,

“Supporting a regulatory framework for cryptocurrency and other digital assets so Black men who invest in and own these assets are protected. She will make sure owners and investors of digital assets benefit from a regulatory framework so that Black men and others who participate in this market are protected.”

A regulatory framework promoting innovation while protecting retail investors would be positive for the crypto space. Significantly, regulatory clarity could end the SEC’s enforcement-driven regulatory approach.

A Kamala Harris win could introduce crypto regulations. Conversely, a Donald Trump victory could lead to SEC Chair Gary Gensler’s dismissal. In July 2024, Trump famously said he would fire Gary Gensler on Day 1 if re-elected.

According to the betting platform Polymarket, Trump’s odds of winning the US presidential election increased from 54.7% (October 14) to 59.9% (October 19).

The polls and betting odds may draw more investor scrutiny as the US Presidential Election date looms. Despite Kamala Harris’s recent support for crypto, Trump remains the crypto market’s preferred choice.

SEC Appeal in Ripple Case Adds Uncertainty to XRP

On October 17, the Securities and Exchange Commission (SEC) filed the Civil Appeal Pre-Argument Statement (Form C) and addenda in the SEC vs. Ripple case.

Speculation that the SEC missed an October 16 deadline briefly raised hopes that the SEC could not pursue the appeal. However, pro-crypto lawyers addressed the uncertainty, stating that appellate courts give federal agencies a lot of leeway vis-à-vis deadlines for court filings.

Notably, the SEC is challenging the following rulings:

• Programmatic Sales of XRP ruling.
• Brad Garlinghouse and Chris Larsen aiding and abetting.
• Chris Larsen and Brad Garlinghouse’s offers and sales of XRP.
• XRP distributions.

The Programmatic Sales of XRP ruling is the most significant for XRP and the broader crypto market. A reversal could lead to US crypto exchanges delisting XRP, adversely impacting adoption and XRP price trends. Uncertainty about the appeal left XRP trailing the broader crypto market. From Monday, October 14, to Saturday, October 19, XRP gained 2.76% to $0.5467.

US ETH-spot ETF Market Eyes Two-Week Inflow Streak

Ethereum (ETH) benefitted from the boost in crypto demand. The US ETH-spot ETF market saw total net inflows of $78.8 million in the week ending October 18. Significantly, the ETH-spot ETF market recorded net inflows for two consecutive weeks, the first time since launching in July 2024.

Increased demand through the ETH-spot ETF market supported an ETH return to $2,600. From Monday, October 14, to Saturday, October 19, ETH was up 6.88% to $2,639.