The crypto market is facing renewed pressure as regulatory uncertainty, weaker ETF flows and rising Treasury yields weigh on major digital assets.
Bitcoin has come under fresh selling pressure, while XRP is struggling to stay comfortably above $1 after several negative developments emerged over the past 24 hours.
Regulatory concerns are leading the latest wave of uncertainty. The Clarity Act has lost momentum in the U.S. Senate, while the Securities and Exchange Commission is reportedly considering another delay to its proposed “innovation exemption.” The initiative is intended to provide a clearer path for trading tokenized securities on blockchain networks under existing securities regulations.
The proposal has faced questions from the White House and Wall Street over its legal basis and potential consequences for financial markets.
The SEC’s separate “Reg Crypto” initiative has also been delayed. The regulator abruptly postponed a scheduled Friday meeting that was expected to address proposed fundraising rules for token projects and has not yet announced a replacement date.
MSCI is adding another source of concern. The global index provider is consulting on a proposal to exclude “non-operating companies” from its equity indexes. Strategy and Metaplanet, both major corporate Bitcoin holders, are among the companies that could potentially be removed.
Bitcoin ETF Demand Weakens
Spot Bitcoin ETF flows have also turned into a headwind. U.S.-listed funds have recorded approximately $333 million in net outflows this week, reversing the $853 million in inflows registered during the previous week.
That earlier inflow streak had suggested institutional interest was returning to Bitcoin, but the latest withdrawals have weakened the signal. Investors have now pulled more than $4 billion from U.S. spot Bitcoin ETFs on a year-to-date basis.
Bond markets are providing little relief either. A $25 billion auction of 30-year U.S. Treasury notes on Thursday saw yields climb as high as 5.22%, according to the Treasury Department. Some dealers described the yield as the highest since 2001.
Higher long-term Treasury yields increase borrowing costs and make income-generating investments more attractive compared with Bitcoin, which does not provide a native yield. The resulting shift in capital preferences could add further pressure to risk assets.
The combination of stalled crypto legislation, renewed ETF outflows and elevated bond yields leaves the market with limited support for a near-term rally. XRP is particularly exposed as it continues to defend the $1 level.
XRP’s $1 Support Faces a Key Test
XRP has managed to hold above $1 despite the broader market weakness. However, a decisive break below the psychological level could accelerate selling pressure.
Some investors may have accumulated XRP below $1 during late 2024, potentially making the level an important cost basis for holders. A break below it could therefore prompt additional selling.
The current setup leaves XRP’s $1 support and Bitcoin’s multi-week trading range looking increasingly vulnerable ahead of the next trading session.
Analysts Still Expect a Stronger Second Half
Despite the recent weakness, some market observers continue to expect cryptocurrencies to regain momentum later this year.
Matt Mena, senior crypto research strategist at 21Shares, highlighted the crypto market’s relative strength in July. According to Mena, the total crypto market outperformed the S&P 500 by 7.5 percentage points and the Nasdaq-100 by 14.2 percentage points during the month.
He said that outperformance could provide the foundation for a strong third quarter and potentially an even stronger fourth quarter, with Bitcoin potentially reaching $100,000, Ether moving toward $3,000, HYPE reaching $70 and SOL climbing to $110.
