Ripple Filing Spurs SEC Appeal Speculation

US Economic Indicators Fuel Fed Rate Cut Speculation, Pressuring Cryptos

US economic indicators fueled investor bets on a 25-basis point Fed rate cut in the week ending September 6. US labor market data and a resilient Services PMI lowered expectations of a 50-basis point September Fed rate cut, affecting crypto demand.

JOLTs Job Openings fell from 7.910 million in June to 7.673 million in July.

The ADP reported an increase of 99k in employment in August, down from 111k in July.

Initial jobless claims declined from 232k in the week ending August 24 to 227k in the week ending August 31.

The US unemployment rate fell from 4.3% in July to 4.2% in August, while nonfarm payrolls increased by 142k, up from 89k in July.

The ISM Services PMI unexpectedly increased from 51.4 in July to 51.5 in August, signaling a resilient services sector, which accounts for over 70% of the US economy.

While job openings were lower, a drop in the US unemployment rate reduced the chances of a 50-basis point rate cut. According to the CME FedWatch Tool, the chances of a 50-basis point rate cut fell from 40.0%, on September 5, to 30.0%, on September 6.

Shifting sentiment toward the September interest rate decision impacted buyer demand for riskier assets. The total crypto market cap was down 5.23% to $1.865 trillion from Monday, September 2 to Saturday, September 7. Notably, the Nasdaq Composite Index fell by 5.77% to 16,691 in the week ending September 6.

US BTC-spot ETF Flow Trends Sink BTC Demand

Falling bets on a 50-basis point September Fed rate cut affected the US BTC-spot ETF market.

According to Farside Investors, the US BTC-spot ETF market saw net outflows for the second consecutive week. For the week ending September 6, notable flows included:

Grayscale Bitcoin Trust (GBTC) saw net outflows of $160.7 million in the week ending September 6 (previous week: -$119.2 million).

Fidelity Wise Origin Bitcoin Fund (FBTC) had net outflows of $404.9 million (PW: -$62.7 million).

Bitwise Bitcoin ETF (BITB) reported net outflows of $59.8 million (PW: -$56.6 million)

ARK 21Shares Bitcoin ETF (ARKB) had net outflows of $40.8 million (PW: -$221.0 million).

iShares Bitcoin Trust (IBIT) had zero net flows (PW: +$210.6 million).

Overall, the US BTC-spot ETF market saw total net outflows surge from $277.2 million in the week ending August 30 to $706.1 million in the week ending September 6.

Nine of the eleven issuers reported net outflows in the week ending September 6, impacting BTC demand.

Monday, September 2, through Saturday, September 6, BTC was down 5.69% to $54,131.

US ETH-spot ETF Market Outflows Continue

The US ETH-spot ETF market saw outflows extend to five sessions in the week ending September 6.

According to Farside Investors, the US ETH-spot ETF market reported total net outflows of $91.1 million, up from $12.4 million in the week ending August 30. Since launch, total net outflows reached $568.5 million, affecting ETH demand.

From Monday, September 2 to Saturday, September 7, ETH was down 6.54% to $2,270.

SEC vs. Ripple: Court Filing Spurs Speculation on SEC Appeal

On September 4, Ripple filed for a stay of the monetary portion of the August 7 judgment, fueling speculation about a possible SEC appeal against rulings from the SEC vs. Ripple case.

According to the filing, the SEC consented to Ripple placing 111% of the $125 million penalty with its counsel. The stay will remain effective for 30 days beyond the 60-day appeal window.

Notably, there were mixed reactions to the court filing.

Pro-crypto lawyer Fred Rispoli saw an increased chance of an SEC appeal, saying,“IMO 60/40 in favor of appeal.”

Conversely, pro-crypto lawyer Jeremy Hogan downplayed the chances of an appeal, stating,

“Most likely the SEC just hasn‘t made a decision whether it will appeal yet. Why？ Filing a Notice of Appeal – see sample below – takes only 15 minutes (you file the Notice and then have 70 days to file the actual brief). If the decision to appeal was already made, there’s no reason to delay filing the Notice – especially when you think its bad case authority out there.”

From Monday, September 2, to Saturday, September 7, XRP was down 4.44% to $0.5234. XRP fell to a Friday low of $0.5027 before retaking the $0.52 handle.

Coinbase Tumbles on Broad-base Crypto Sell-Off

This week, Coinbase (COIN) shares tumbled 19.64% to $147.35 in the week ending September 6, reflecting broader crypto market losses. Coinbase significantly underperformed compared with the Nasdaq Composite Index.

The pullback came despite positive legal developments in the SEC vs. Coinbase case. On Friday, Coinbase Chief Legal Officer Paul Grewal shared the latest court ruling, stating,

“Today Judge Failla ruled from the bench on our motion to compel the SEC to provide key information for the defense of our case. In short, the Court ordered the SEC to produce important discovery. Ill share the full transcript when we have it, so you can read it for yourself. In the meantime, we thank the Court for its careful consideration.”

In March 2024, Judge Katherine Failla partially granted the Coinbase Motion to Dismiss (MTD). However, the court did not grant the motion to dismiss charges for operating as an unregistered securities exchange. The court ruling stated,

“The court concludes that because the well-placed allegations of the Complaint plausibly support the SEC‘s claim that Coinbase operated as an unregistered intermediary of securities, Defendants’ motion must be denied in large part.”