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Bitcoin ETF Rumor Sparks Volatility in Crypto Market

Bitcoin Spikes to $30K on False Report

October 17, 2023 - Updated on August 20, 2024
in Crypto
Reading Time: 2 mins read
9
0

The cryptocurrency market witnessed a roller-coaster ride on Monday, as the price of bitcoin soared and then plunged following a false report about a bitcoin ETF approval by the U.S. Securities and Exchange Commission (SEC). The report, which was later retracted, claimed that BlackRock, the world’s largest asset manager, had received the green light from the SEC to launch a spot bitcoin exchange-traded fund (ETF) in the U.S.

The false report was first published by Coin Telegraph, a crypto news outlet, on X. It stated that the SEC had approved an application by BlackRock’s iShares division, which specializes in ETFs, for a spot bitcoin ETF. The report cited unnamed sources and did not provide any evidence or official confirmation.

The news quickly spread across social media and other news outlets, triggering a surge in bitcoin’s price. Bitcoin, which had been trading around $27K earlier in the day, jumped as much as 10% to $30K, its highest level since August. The spike also lifted other cryptocurrencies, such as ethereum and XRP, which gained 7% and 5%, respectively.

bitcoin etf approval

Bitcoin Plummets After Report is Debunked

However, the euphoria was short-lived, as the report was soon debunked by official sources. A Fox Business reporter said on X that BlackRock had denied the report and confirmed that its iShares Spot Bitcoin ETF application was still under review by the SEC. The SEC also told Reuters that it had not approved any spot bitcoin ETF applications.

As the truth came out, bitcoin’s price dropped sharply, erasing most of its gains. Bitcoin was last trading at $28K, up about 3% from its previous close. Other cryptocurrencies also pared their gains, as the market volatility increased.

The false report also led to a significant amount of liquidations in the crypto derivatives market, as traders who had bet on higher or lower prices were forced to close their positions. According to data from Bybt, nearly $100 million worth of crypto futures contracts were liquidated in one hour.

Bitcoin ETF Remains a Crypto Holy Grail

The incident shows how sensitive the crypto market is to any potential good news regarding a spot bitcoin ETF in the U.S., which is widely seen as a catalyst for more institutional adoption and mainstream acceptance of cryptocurrencies. A spot bitcoin ETF would track the price of bitcoin directly and allow investors to buy and sell the digital asset through a regulated platform.

However, the SEC has so far rejected all spot bitcoin ETF applications, citing concerns over market manipulation, fraud, custody, and investor protection. The regulator has delayed its decisions on several pending applications this year, including those from VanEck, Valkyrie, WisdomTree, and Kryptoin.

Meanwhile, some crypto proponents have argued that a spot bitcoin ETF is not necessary for the growth of the industry, as there are already other ways to gain exposure to bitcoin, such as trusts, funds, futures, and exchange platforms. Some have also pointed out that other countries, such as Canada and Brazil, have already approved spot bitcoin ETFs without causing any major impact on the market.

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Chrissy Ryland

Chrissy Ryland

Chrissy Ryland - I'm a freelance writer and blogger from Northern California. I grew up loving all things entertainment and travel and now I am blessed with a career that lets me write about both of those topics along with many others. For inquiries about a story you think I might want to cover, please contact me at worldhab@gmail.com

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