This Week's Crypto Highlights: GBTC Outflows and BTC Surge

Despite warnings that the BTC-spot ETF does not represent the bitcoin market, investors still responded to updates related to the BTC-spot ETF. Concerns among investors about outflows from the Grayscale Bitcoin Trust (GBTC) led to BTC dropping to a weekly low of $38,542.

However, the slowdown in outflows on Wednesday and Thursday provided a more optimistic context. Even though there were net outflows for the fourth consecutive day on Thursday, BTC reached a high of $42,252 on Friday in reaction to the Thursday BTC-spot ETF statistics. GBTC outflows reached $640.5 million on the seventh day of trading before decreasing to $394.1 million on the tenth day of trading.

The market's sensitivity to GBTC numbers increased during the middle of the week after JPMorgan Chase (JPM) highlighted GBTC flows as a key factor influencing BTC price trends. JPMorgan viewed a deceleration in GBTC outflows as a positive signal for BTC prices.  

The iShares Bitcoin Trust (IBIT) benefited from Bitcoin's resurgence to $42,000 on Friday, leading to the market cap surpassing the $2 billion mark.  

Ripple Granted Permission to Submit Sur-Reply in SEC Case  

Ongoing developments in the SEC v Ripple case attracted investor attention this week. On Wednesday, Ripple submitted a Motion to File a Sur-Reply, aiming to expand on its previous opposition to the SEC's Motion to Compel.

The following day, Judge Analisa Torres approved the Motion to File a Sur-Reply. The content of the Sur-Reply focused on addressing purported mischaracterizations by the SEC within its Motion to Compel, urging the court to disregard these alleged misstatements of facts.

This legal action is in relation to Ripple's alleged violation of section 5 of the 1933 Securities Act by selling unregistered XRP to US institutional investors. In a previous ruling in July, Judge Analisa determined that Ripple should have registered XRP as a security when selling to institutional investors.

Ripple and the SEC are currently engaged in remedies-related discovery, which must be concluded by February 12.

The Motion to Compel and the Opposition to the Motion to Compel pertain to financial statements for 2022-23 and post-complaint contracts governing XRP sales to institutional investors. Ripple opposed providing these documents, arguing that the SEC had initially claimed that post-complaint conduct was irrelevant to the case. Now, the SEC's attempt to reverse its position should not be permitted.

Post-complaint conduct could impact the penalty imposed on Ripple for violating Section 5 of the Securities Act. Judge Torres could levy a punitive penalty if the SEC proves that Ripple continued to breach securities laws after the July court ruling.

The main spotlight remains on the final stage of the SEC v Ripple case regarding XRP sales to institutional investors. However, the SEC's plan to appeal the ruling on Programmatic Sales of XRP remains a potential obstacle.

Throughout the week, XRP declined by 2.58% to $0.5324. On Friday, XRP joined a broader crypto rally, reducing its losses.  

XRP Weekly Chart 270124

JPMorgan's Coinbase Downgrade Makes Waves in Crypto News  

JPMorgan Chase downgrades Coinbase due to lower trading volumes and fees, leading to a 3.14% drop in Coinbase shares. The CEO's anti-crypto stance drew attention in the crypto market spotlight. However, despite the downgrade, Coinbase closed the week with a 0.36% increase to $125.20. It surged 3.46% on Friday and also gained investor interest following news of an upgrade from Oppenheimer, from perform to outperform.  

COIN 270124 Weekly Chart

Crypto Showdown: Senator Elizabeth Warren and Senator Cynthia Lummis Clash  

Capitol Hill's anti-crypto sentiment, as well as the SEC's stance, have impacted crypto demand. Senator Elizabeth Warren reentered the crypto discourse, advocating for the regulation of crypto to combat the evasion of sanctions. She is pushing for the Digital Asset Anti-Money Laundering Act, seeking AML and CFT frameworks for the crypto market.

In contrast, Senator Cynthia Lummis voiced her view on the matter, emphasizing that while criminals may exploit crypto, the issue lies with criminals, not the entire industry. She, along with Senator Kirsten Gillibrand, introduced the Responsible Financial Innovation Act in 2022, aiming to foster innovation while safeguarding retail investors and giving the CFTC increased oversight.  

CFTC Chair Urges for Crypto Regulation Legislation  

CFTC Chair Rostin Behnam emphasized the need for legislation to regulate the crypto market, expressing concerns about the potential misunderstanding of regulatory approval for bitcoin ETPs as comprehensive oversight of digital assets.