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Bitcoin Jumps, Then Dumps to $45K as Fake News About Spot Bitcoin Approval Liquidates $50M
The immediate price reaction showed that bitcoin's price might be capped if a real approval arrives, one analyst noted.
Updated Mar 8, 2024, 7:34 p.m. Published Jan 9, 2024, 11:04 p.m.
Bitcoin [BTC] endured wild swings during Tuesday's trading session as a U.S. Securities and Exchange Commission (SEC) social media post about approving spot bitcoin exchange-traded funds (ETF) turned out to be false, leaving market participants baffled.
BTC first rallied 2.5% to a fresh 19-month high of $47,900 immediately following the official SEC account's shared on X (formerly Twitter) about the bitcoin ETF approval, attracting massive attention with crypto observers prematurely celebrating the landmark decision.
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Then, bitcoin sharply declined nearly 6% to as low as $45,100 when it turned out the SEC's account was compromised, and SEC Chair Gary Gensler denied the news.
Read more: SEC Has Not Approved Bitcoin ETFs, but Its Hacked X Account Briefly Said Otherwise
The wild price action liquidated over $50 million worth of derivatives trading positions on crypto exchanges within an hour, CoinGlass data shows. Liquidations occur when an exchange forcefully closes a trader's open position using borrowed money due to loss of margin.
Recently, BTC changed hands slightly below $46,000 at press time, down some 2% over the past 24 hours.
This was the second instance during the day when a false social media post triggered massive volatility. Earlier Tuesday, dogecoin [DOGE] jumped as much as 9% on an X post about the death of the token's mascot, then declined as the news turned out to be false.
Alex Krüger, co-founder of Asgard Markets, noted that today's events suggested bitcoin might not rally as much as bulls hope when the real news about an approval arrives.
"Fake ETF news showed BTC upside is clearly capped until we see actual ETF inflows," Krüger said in an X post. "Time for ETH to take over."
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