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News/The Chain Reaction Triggered by False Bitcoin ETF News

The Chain Reaction Triggered by False Bitcoin ETF News

Van Thanh Le

Oct 17 2023

7 months ago4 minutes read
Robot tearing up fake ETF news at news desk

A Rollercoaster Ride: Market Metrics and Price Volatility

On a seemingly ordinary day, Bitcoin’s price shattered ceilings, touching a startling peak of $30,200 on Bitfinex, a reputable cryptocurrency exchange. This two-month pinnacle was exclusively courtesy of deceiving news surrounding the alleged sanction of BlackRock’s iShares Bitcoin Spot ETF. 

This wave of speculation was soon met by a staunch reality check. Within hours, Bitcoin's price plummeted, making a pit-stop around the $28,000 mark—a level punctuating the market reality again after its momentous joyride. 

chart.webp

As the dust settled, the price of the cryptocurrency giant showcased a dauntless spirit, fixing itself securely above the 0.5 Fibonacci retracement level at $28,200. 

The two months leading up to the event had stressed this value as a key resistance level. Consequently, the Bitfinex exchange alone witnessed a hearty scuffle involving close to $136 million worth of liquidations. This tumultuous 24-hour episode underscored the profound impact that counterfeit ETF news had on crypto coin prices.


Breaking Down the Regulatory Maze

Taking center-stage during this chaotic episode was the Securities and Exchange Commission's (SEC) enigmatic disposition towards Bitcoin Spot ETF applications. The Commission, known for its historical rejections of similar applications had Bitcoin enthusiasts befuddled. The SEC cited the rampant susceptibility of the cryptocurrency market to manipulative practices as a key reason for its dismissals.

Jubilant investor and concerned SEC official in split screen.webp

However, these rejections were not isolated events. A large number of spot BTC ETF applications have been in limbo, stemming from continuous delays by the SEC. Notable among these are applications from industry behemoths like BlackRock, VanEck, and WisdomTree. 

As per the regulatory framework, the SEC's final decision on the ARK 21 Shares Bitcoin ETF application is due to be arrived at by January 10, 2024. This elusive deadline has caused an air of mystique and anticipation to pervade through the minds of investors and market analysts alike.


Understanding Stakeholder Perspectives: A Mixed Bag

The dubiously reported approval of BlackRock’s ETF stirred up a range of contrasting responses. Edward Snowden, one of the most influential whistleblowers, warned that Bitcoin ETF could potentially become an instrument of 'subjugation by traditional finance.' 

On the other hand, Larry Fink, the CEO of BlackRock, read the market tremor as an affirmation of 'pent-up interest in crypto.' Further, he echoed the opinion of several Bitcoin believers by referring to the crypto giant as a 'flight to quality.'

Opinions were equally divided among market analysts too. Macro analyst Alex Krüger and Adam Cochran, a partner at Cinneamhain Ventures, saw the event as evidence that the ETF's pricing was not yet factored into the market. 

Cochran went a step ahead, insinuating that the fake news 'massively just hurt the chances of real ETF approval.' Echoing his sentiments, Pete Rizzo, an editor from Kraken FX, opined that the event further widens the timeline for a Bitcoin ETF by at least six months.


The Whale Tales and Other Financial Consequences

The market’s reaction to the false ETF news was no less than a tsunami for some investors—leading to serious financial ramifications. An anonymous crypto whale reportedly suffered a mammoth loss of $50,000 within minutes. This, due to the knee-jerk reaction of the market to the deceptive news. 

Notwithstanding this event, seasoned trader Christopher Inks triggered some optimism with his speculation. According to Inks, a bullish run breaking the ~$31,000 mark could potentially lead to a rally within the $38,000-$40,000 range. 

Echoing his optimism was Eric Weiss, founder & CIO of the Blockchain Investment Group. Weiss suggested that the event provided mere 'glimpse' into the kind of reaction a real Bitcoin ETF approval might trigger and advised investors to 'act accordingly.'


The Great Divide: Community Debates and Contrasting Opinions

The event also led to fervent discussions within the crypto community, with opinions largely divided. One such member, Victor, firmly believed that the likelihood of securing a real ETF approval had been severely hampered due to the ripples caused by the fake news. This, Victor argued, would give the SEC more reasons to deny future applications.

On the other hand, Jeff Dorman, CIO at Arca, found the reasoning flawed. He dismissed the SEC's supposed dismissal of applications because of a report by a 'rogue media outlet.' Pointing out that 'announcements don’t matter, flows matter,' he suggested that concrete price action would materialize only upon the ETF's legitimate approval.


Looking Ahead: Long-Term Outlook and Historical Mirrors

Jeff Dorman put forth an interesting angle. He laid parallels between Bitcoin and the trajectory of gold, which saw a whopping 350% surge in value over ten years since the sanctioning of the first gold ETF in the U.S. back in 2004. 

He further highlighted the alignment of financial leviathans like BlackRock, Fidelity, and Invesco, which are all set with respective spot ETFs, as an indication of a potential similar surge waiting to unfold for Bitcoin.


Wrapping It Up: Valuable Takeaways

Bitcoin rollercoaster capturing market volatility.webp

To sum it up, the widespread chaos triggered by the unverified Bitcoin ETF news served as a multifaceted mirror—reflecting the market's heightened sensitivity to regulatory modifications, the SEC's prudent approach, and the polarized perspective within the crypto community. It bolstered the need for authentic information while underscoring the importance of robust market mechanisms. 

The incident also offered a sneak peek at the potential market patterns if a legitimate Bitcoin ETF got the regulatory go-ahead. This makes it an essential case study for market spectators, investors, and regulators across the globe.


FAQs 

1. Why did Bitcoin's price surge and then correct itself quickly?

Bitcoin's price surged because of unconfirmed news about BlackRock's iShares Bitcoin Spot ETF approval, causing a flurry of market activity. When the news was debunked, the price swiftly retracted back to its previous levels.

2. What's the SEC's stance on Bitcoin spot ETF?

The SEC has a history of rejecting Bitcoin spot ETF applications, citing the crypto market's vulnerability to manipulation. Several spot BTC ETF applications await decision, postponed by the SEC.

3. How did stakeholders react to the fake ETF news?

Stakeholders had diverse reactions. While some saw it as a blow to real ETF approval, others saw it as an indication of pent-up interest in crypto and a slight setback to the ETF timeline.

4. Did the fake ETF news impact traders negatively?

Yes, several traders faced significant losses due to price volatility resulting from the false news. One case highlights an unnamed crypto whale losing $50,000 within minutes.

5. What's the possible future if a Bitcoin ETF were to be realized?

Drawing parallels with gold’s ETF, some suggest Bitcoin could witness significant increment following a real ETF approval. However, it depends on numerous factors, including market conditions and regulatory landscape.

This article has been refined and enhanced by ChatGPT.

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