SEC temporarily postpones XRP-related ETF, Bitcoin rises driven by institutional demand | Crypto market dynamic analysis

The U.S. Securities and Exchange Commission (SEC) recently took a pause on the approval of the XRP-related Crypto Assets Spot ETF, despite approving the listing of the Solana fund, casting a shadow over the future of the XRP Spot ETF. Meanwhile, news that JPMorgan allows clients to borrow against Bitcoin and Ethereum as collateral, along with increased institutional demand, has pushed Bitcoin prices to break through key resistance levels. This article will delve into the SEC's latest actions, the progress of the Ripple case and its impact on XRP prices, as well as Bitcoin's market performance and future outlook driven by institutional funds.

SEC delays XRP related ETF, Solana fund approved

The U.S. Securities and Exchange Commission (SEC) recently postponed the listing approval of the exchange-traded fund (ETF) associated with XRP, despite the market generally anticipating the SEC's ETF framework and listing standards. The SEC approved the Bitwise 10 Crypto Assets Index Fund (BITW) to convert to an ETF, but simultaneously issued a halt order preventing the launch of that ETF.

BITW aims to provide investors with exposure to Bitcoin (BTC) and major Crypto Assets including Ether (ETH), XRP, Solana (SOL), Cardano (ADA), SUI, Chainlink (LINK), Avalanche (AVAX), Litecoin (LTC), and Polkadot (DOT). As of July 21, XRP accounted for 6.7% of the fund's holdings, ranking third, behind BTC (73.2%) and ETH (14.2%). However, the delay in the launch has increased the uncertainty of the XRP Spot ETF launch timetable, putting pressure on XRP demand.

Earlier this month, the SEC approved the rule change for Grayscale Digital Large Cap Fund to convert to Grayscale Digital Large Cap ETF (GDLC). GDLC invests in BTC, ETH, ADA, SOL, and XRP. Nate Geraci, President of The ETF Store, commented on the SEC's suspension order: "The SEC's Trading and Markets division has 'approved' the Bitwise 10 Crypto Index ETF... however, like the Grayscale Digital Large Cap ETF, this approval order has been suspended. In my opinion, both should be approved for conversion/listing as soon as possible. The situation is quite strange."

It is worth noting that although GDLC has been approved and suspended, the SEC still allows the Rex Osprey Solana (SOL) ETF to launch on July 2. A commonality between GDLC and BITW is XRP. It remains unclear whether the SEC will delay the launch of the crypto assets spot ETF that includes XRP exposure until the conclusion of the Ripple case, considering the recent launch of the SOL spot ETF.

Will the SEC withdraw its appeal and expedite the approval of the XRP Spot ETF?

Investors are awaiting whether the SEC will vote to decide on the appeal to overturn the 2023 XRP programmatic sales ruling. The agency had previously agreed to withdraw the appeal based on Ripple's withdrawal of its counterclaim under the agreed settlement terms. However, Judge Analisa Torres denied the motion for indicative relief, meaning the SEC must now formally vote on whether to withdraw the appeal, despite the prior agreement. A closed-door meeting on Thursday, July 24, may allow SEC Chairman Paul Atkins and the commissioners to vote. However, the agenda for the meeting is confidential, and investors are unaware of the timing of the vote. Legal experts believe that given the SEC's willingness to withdraw under a favorable settlement ruling, they will vote to support the withdrawal of the appeal. However, crypto spot ETFs containing XRP exposure and the XRP spot ETF may remain on hold before the formal withdrawal of the appeal motion. This could limit XRP's upside potential, considering the impact of ongoing demand for BTC, ETH, and SOL spot ETFs on its price trajectory.

XRP Price Outlook: Impact of SEC Appeal Vote and ETF News

XRP fell 0.03% on Tuesday, July 22, after rising 2.8% on Monday, closing at $3.5517. The token underperformed against the broader market, with the total market capitalization of Crypto Assets increasing by 1.61% to $3.92 trillion. The recent price movements of XRP depend on the SEC's appeal vote and the related progress of the US XRP Spot ETF. A breakout above the historical high of $3.6629 on July 18 could bring the $4 level into view. Sustained breaks above $4 could see bulls targeting the $5 mark. Conversely, a drop below $3.4 could expose the $3 level.

JPMorgan news and institutional demand drive Bitcoin up

As XRP stagnates after the progress of the Crypto Assets Spot ETF, Bitcoin (BTC) has returned to $120,000 for the first time in four trading days. Reports indicate that American banking giant JPMorgan Chase (JPM) allows clients to use Bitcoin and Ether holdings as collateral for loans, which has driven BTC to a session high.

According to reports, the bank will start allowing crypto asset mortgages next year. Given JPMorgan CEO Jamie Dimon's long-standing anti-crypto stance, this news is significant. In December 2023, Dimon made vehement anti-crypto remarks at a hearing of the Banking, Housing and Urban Affairs Committee, concluding, "If I were the government, I would shut it down."

The increase in institutional demand has also fostered a positive sentiment, offsetting the outflow of funds from BTC Spot ETFs. On Monday, July 21, reports emerged that Trump Media holds approximately $2 billion in BTC and Bitcoin-related securities, accounting for about two-thirds of its $3 billion in liquid assets. Crypto US host and journalist Eleanor Terrett commented: "Trump Media now states that as part of its previously announced treasury strategy, it holds approximately $2 billion in BTC and Bitcoin-related securities—about two-thirds of its $3 billion in liquid assets."

US Bitcoin Spot ETF capital inflow interrupted

Despite the US Bitcoin Spot ETF market ending 12 consecutive days of inflows on July 21, BTC still rose for the second consecutive trading day. During these 12 days, total inflows reached $6.1131 billion. US Bitcoin Spot ETF issuers faced outflows on the second trading day on July 22.

According to data from Farside Investors, the main fund flows on July 22 included: Bitwise Bitcoin ETF (BITB) with a net outflow of $42.3 million. ARK 21Shares Bitcoin ETF (ARKB) reported a net outflow of $33.2 million. Meanwhile, Grayscale Bitcoin Trust (GBTC) saw a net inflow of $7.5 million. Due to pending flow data for BlackRock (BLK) iShares Bitcoin Trust (IBIT), the total outflow for US Bitcoin Spot ETF reached $68 million.

BTC Price Outlook: CLARITY Act, Working Group Report and Spot ETF Fund Flow

BTC rose by 2.2% on July 22, following a 0.13% increase on Monday, closing at $119,980. Recent price movements depend on several key drivers. These include the progress of the CLARITY Act in Congress, developments related to strategic reserve assets, and trends in the flow of funds into Spot ETFs.

Potential scenarios:

Bearish scenario: Legislative barriers, the U.S. government's silence on establishing its BTC reserves, hawkish signals from the Federal Reserve, and outflows from ETFs. The combination of these factors could push BTC towards $115,000, potentially exposing the 50-day exponential moving average (EMA).

Bullish scenario: Progress of the CLARITY Act, calls for increasing the U.S. government's BTC holdings, dovish signals from the Federal Reserve, and ETF fund inflows. In these scenarios, BTC may target the historical high of $122,057.

Key Points

Investors should closely monitor the key driving factors that may determine whether XRP and Bitcoin can reach new highs, including:

XRP case update: Pending SEC appeal vote.

U.S. Presidential Task Force Report: Recommendations on Crypto Assets Reserves.

Legislative progress: The progress of the CLARITY bill in Congress.

Federal Reserve Guidance: Hawkish or Dovish Signals.

ETF market flow: The trend of fund flows is crucial for the supply and demand balance of BTC.

Conclusion

The current Crypto Assets market is at a critical juncture, with the SEC's cautious stance on the XRP-related ETF contrasting sharply with Bitcoin's strong performance driven by institutional support. The final outcome of the Ripple case and the SEC's voting results on the appeal will directly impact market sentiment and price trends for XRP. At the same time, Bitcoin's future performance will be closely tied to U.S. policies, macroeconomic signals, and the capital flow of Spot ETFs. Investors should closely monitor these dynamics to navigate potential fluctuations in the Crypto Assets market.