Major cryptocurrencies are struggling to recover as a series of regulatory and market-related pressures weighs on sentiment. Weak ETF demand and rising bond yields are adding to the strain.
Bitcoin is facing renewed selling pressure, while XRP is hovering near the crucial $1 mark after several negative developments hit the market over the past 24 hours.
Regulatory uncertainty remains a major concern. The U.S. Senate has made little progress on the Clarity Act, while the Securities and Exchange Commission is reportedly preparing to delay its long-awaited “innovation exemption.” The proposed framework is designed to make trading tokenized securities on blockchain networks easier within existing securities regulations.
The delay comes as officials and Wall Street participants raise questions about the proposal’s legal foundation and its potential effects on financial markets.
The SEC’s separate “Reg Crypto” initiative has also been pushed back. The agency unexpectedly canceled a Friday meeting that was expected to discuss a proposed framework for token-project fundraising and has yet to provide a new date.
MSCI has added another layer of uncertainty. The global index provider is consulting on plans to exclude “non-operating companies” from its equity indexes, with Bitcoin treasury firms Strategy and Metaplanet among the companies that could be affected.
Bitcoin ETF Flows Turn Negative
Spot Bitcoin ETFs are providing little support for the market. U.S.-listed funds have recorded about $333 million in net outflows so far this week, reversing the $853 million of inflows seen last week.
The previous week’s inflows had raised hopes that institutional demand was returning, but the latest withdrawals have weakened that signal. On a year-to-date basis, more than $4 billion has flowed out of the funds.
Rising Treasury yields are creating another obstacle for Bitcoin and other risk assets. A $25 billion auction of 30-year U.S. Treasury notes on Thursday resulted in yields reaching as high as 5.22%, according to the Treasury Department. Some dealers described the yield as the highest seen since 2001.
Higher long-term yields increase financing costs and make yield-generating assets more attractive relative to Bitcoin, which does not produce income. This is adding another layer of pressure to an already fragile market.
With crypto legislation stalled, ETF outflows returning and Treasury yields climbing, the market lacks several of the catalysts needed for a strong near-term breakout. XRP is particularly vulnerable as it attempts to defend the $1 threshold.
XRP’s $1 Level Becomes Critical
XRP has managed to remain above $1 despite the broader weakness, but losing that level could trigger additional selling.
Many traders may have purchased XRP below $1 during late 2024, meaning a break beneath the level could encourage holders to exit positions or lock in losses.
For now, both XRP’s $1 support and Bitcoin’s established multi-week trading range appear increasingly fragile as traders prepare for the next session.
Bulls Still See Potential for a Year-End Rally
Despite the current headwinds, some analysts remain confident that cryptocurrencies could regain momentum later in the year.
Matt Mena, senior crypto research strategist at 21Shares, pointed to the crypto market’s strong July performance compared with traditional equities. He said 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.
Mena said the relative strength could set up a strong third quarter and potentially a much stronger final quarter, with possible targets of $100,000 for Bitcoin, $3,000 for Ether, $70 for HYPE and $110 for SOL.
