The crypto market experienced a roller-coaster ride on Monday, as a fake news report about the approval of a spot Bitcoin ETF by the SEC triggered a brief surge in the price of the leading cryptocurrency, followed by a sharp drop that wiped out millions of dollars worth of trading positions.
According to data from Coinglass, more than US$56 million worth of long positions, mostly from traders who were betting on higher prices, were liquidated in the span of an hour, as Bitcoin spiked above US$30,000 and then plunged below US$28,000. The fake news report, which claimed that BlackRock Inc. had received the green light to launch a spot exchange-traded fund in the cryptocurrency, was circulated on social media platforms and quickly gained traction among eager investors who have been waiting for years for such a product to hit the market.
However, the report turned out to be false, as BlackRock confirmed that its ETF application was still under review by the regulators. The SEC has not yet approved any spot Bitcoin ETFs, despite receiving multiple applications from various issuers, including heavyweights like Invesco and Fidelity. The agency has cited concerns over market manipulation, fraud, and investor protection as some of the reasons for its reluctance to approve.
The incident highlights the challenge of navigating the crypto space, which is often plagued by misinformation, speculation, and volatility. It also shows the high level of anticipation and demand for a spot Bitcoin ETF, which many analysts believe would be a game-changer for the industry, as it would provide easier and safer access to the cryptocurrency for mainstream investors, potentially driving billions of dollars of inflows and boosting adoption.
While the fake news report may have been a disappointment for Bitcoin ETF enthusiasts, some experts remain optimistic that the SEC will eventually approve such a product, as the crypto market matures and becomes more regulated. They point to the recent approval of Bitcoin futures ETFs, which track the price of Bitcoin through contracts traded on regulated exchanges, as a sign of progress and a stepping stone toward a spot ETF. However, they also caution that investors should be careful and do their research before making any decisions based on rumors or unverified sources.
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