Fact or Fiction: Wishing SEC's Crypto Fake News Was True

• SEC Falls Victim to Market Manipulation Risks Cited as Concern for Bitcoin ETF Approval
• SEC Twitter Account Hack
• Reactions on Twitter
• Impact on Markets and Future Predictions
• Previous Market Movements Due to Fake ETF Announcements
• Long-term Impact of Bitcoin ETFs

SEC Falls Victim to Market Manipulation Risks Cited as Concern for Bitcoin ETF Approval

The Securities and Exchange Commission (SEC) has spent a considerable amount of time debating the approval of a spot bitcoin ETF in the U.S. The organization has frequently brought up the risk of market manipulation as a reason for caution. In an ironic turn of events, the SEC fell victim to this very threat recently.

SEC Twitter Account Hack

An unexpected tweet emanated from the SEC's Twitter account around 4 p.m. ET, stating that the agency had given its approval to the first application. However, Chair Gary Gensler quickly clarified that the news was false and the account had been compromised. He informed that the SEC had not approved the listing and trading of spot bitcoin exchange-traded products. He further revealed that an unauthorised tweet had been posted after someone unknown had compromised the phone number used by the SEC for account verification.

Reactions on Twitter

The incident sparked a wave of reactions from Crypto Twitter, with several high-profile users highlighting the perceived double standard. The false announcement caused a brief increase in the price of bitcoin (BTC), followed by a drop below its level at the time of the inaccurate news.

Impact on Markets and Future Predictions

Given the substantial price fluctuations and a surge of liquidations following the false announcement, it suggests how a genuine announcement might potentially influence the market. An ETF announcement could result in a "sell-the-news" event. The SEC's experience illustrated its point: emerging, unregulated markets are vulnerable to malicious actors. The incident underscores the importance of securing influential social media accounts, especially for significant financial regulators.

Previous Market Movements Due to Fake ETF Announcements

This is not the first instance where false ETF announcement news has affected markets. A previous inaccurate tweet by Cointelegraph in October also propelled bitcoin prices higher. Both instances indicate the enormous anticipation for this announcement. Many in the crypto community anticipate a significant influx of funds into the sector once major institutions like BlackRock and Fidelity, which have applications pending, become firmly established in the space.

Long-term Impact of Bitcoin ETFs

While the hype surrounding the ETF announcement demonstrates the desire for a positive narrative to boost bitcoin, the actual impact of ETFs may be the crucial point. Despite the high demand for positive news in crypto following recent downturns, crashes, and scandals, ETFs are standard investment products and not a guaranteed route to success. The response to gold ETFs in the early 2000s, which resulted in the long-term price of gold soaring, may provide some parallels. It took years for gold to become a mainstream investment, and it is expected that a similar trajectory will be followed by bitcoin.

Edited by Jonathan Stoker