How can a single piece of misinformation cause significant market volatility? This was exemplified in the recent incident involving the bitcoin ETF news that sent the price of the cryptocurrency soaring. On a tumultuous Monday, Bitcoin’s value crossed the $28,000 mark for the first time in a week, sparked by a misleading post about the approval of a spot bitcoin ETF.
Unfounded Rumors and Market Volatility
As U.S. trading opened, a misguided report falsely claimed that BlackRock’s proposed spot bitcoin ETF had received the green light, triggering a trading frenzy and market volatility. The erroneous report led to a 5% surge in Bitcoin’s price, bringing it tantalizingly close to the $30,000 mark. This wave of activity was instigated by a Cointelegraph post, stating, “SEC approves iShares bitcoin spot ETF.” This tweet stayed live for 30 minutes before being amended with the word “reportedly” and was eventually removed. Cointelegraph later issued an apology for the dissemination of incorrect information.
Traders’ Reactions and Resulting Losses
According to a post by Lookonchain, several crypto traders incurred losses as they purchased Bitcoin based on the misleading tweet. The post highlighted a significant Bitcoin holder who invested $600,000 in 20.5 wrapped Bitcoin, only to sell it for a mere $563,000 after the news was refuted. CoinGlass data revealed that, in the 24 hours following the incident, 40,723 traders were liquidated, amounting to a total of $182.4 million in cryptocurrency. Of these liquidations, a staggering $136.36 million were short positions, with Bitcoin trades constituting $100 million.
Implications for Future Bitcoin ETF Approvals
Despite retracting from the $30,000 mark after the refutation of the false report, Bitcoin managed to maintain support above $28,000. This positive price action came on the heels of the U.S. Securities and Exchange Commission’s (SEC) decision not to contest a recent Grayscale court ruling. This could potentially compel the regulator to review the asset manager’s application for a spot bitcoin ETF. XBTO Global CEO, Philippe Bekhazi, regards the SEC’s decision as a pivotal moment for the crypto industry, suggesting it’s a matter of when, not if, this approval will be granted.
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Bekhazi further adds that this approval could unlock new investment opportunities in digital assets for sovereign, pension funds, IRAs, 401ks, and other institutions. He anticipates that an approval might be on the horizon in the first quarter of next year, post the SEC’s comprehensive assessment. This could pave the way for several other applications to get approved in 2024, marking a significant stride in institutional crypto adoption.
As of 1:00 p.m. ET, Bitcoin, the world’s largest digital asset by market capitalization, was trading at $28,054, a 4.8% increase over the past 24 hours, as per CoinGecko data.
