- The Securities and Exchange Commission’s X account made a fake post claiming that the Bitcoin spot ETFs were approved, resulting in BTC hitting close to $48,000
- SEC Chairman Gary Gensler soon clarified that the post was fake and the agency’s account had been compromised, leading to BTC falling back below $46,000
- The event has caused serious implications for the SEC, with analysts and lawmakers calling for the regulator to be investigated for market manipulation.
- The SEC is expected to decide on the first-ever Bitcoin spot ETF for the US market on January 10
Bitcoin hit almost $48,000 – its highest valuation since March 2022 – on Tuesday following a fraudulent X post by the US Securities and Exchange Commission (SEC) claiming that the agency had approved the highly-anticipated BTC exchange-traded funds (ETFs) for trading.
Just minutes after the post was uploaded, SEC chairman Gary Gensler made a statement alleging that the regulator’s account had been hacked, resulting in an “unauthorized tweet”. He also confirmed that the Commission had not approved any ETFs.
Bitcoin Hits $47,900 Following Fake ETF Approval Post By The SEC
As soon as the post was made at 4:11 PM EST, Bitcoin jumped to its highest level in almost 2 years, reaching $47,901. However, the leading cryptocurrency dropped to as low as $44,816 after Gensler quickly confirmed that the news was fake and the agency was yet to decide on the listing and trading of the funds.
The market has been speculating for months that the SEC would approve Bitcoin-focused exchange-traded funds for the spot markets. The product would, for the first time, allow US investors to purchase shares in a fund replicating BTC’s performance without needing them to directly hold the crypto asset.
The securities watchdog is expected to approve a spot Bitcoin ETF on Wednesday, January 10. Analysts say the first of the funds, by ARK Invest and 21Shares, could potentially be listed for trade as soon as Thursday once green-lit.
In the last three months, Bitcoin has surged by about 60%, primarily as a result of an ETF approval being imminent.
Anyways, the latest incident involving the SEC’s fake post and the market’s rapid reaction to the news only demonstrated the agency’s influence and Bitcoin’s continued price sensitivity. Despite the cryptocurrency market remaining largely unregulated and extremely volatile, financial regulators wield significant power over the market’s course through signals around support and opposition for digital currency/assets.
According to CoinGecko, Bitcoin’s price has remained 8% higher over the past two weeks and almost 170% over the past 12 months. This is even after yesterday’s events, signifying growing interest in the apex cryptocurrency by mainstream and institutional investors.
Michael Rinko, a research analyst at Delphi Digital, said that the latest Bitcoin sell-off event displayed a “rattled market”. Adding that the “high-volume boomerang event” would have scared many investors, which led to them “taking some risk off the table”. Rinko also noted that the market’s initial reaction to the news was “encouraging”.
Washington Accuses SEC Of Market Manipulation, Calls For Thorough Investigation
This is not the first time rumors and speculations related to Bitcoin ETF approvals have swayed crypto prices, but this time things have taken a rather different turn. Since the fake news came from an official government account, traders trusted the source and reacted instantly to buy BTC at higher prices. The event was an example of the vulnerabilities of digital asset price dynamics associated with regulatory decisions or announcements.
The SEC’s X account hacking event did not unnoticed. Senators Cynthia Lummis of Wyoming and Bill Hagerty of Tennessee expressed their concerns and have called for a thorough investigation into the matter.
Lummis warned of the fraudulent announcement causing manipulation in the crypto market, while Hagerty stressed the need for accountability from the agency – which demands the same response from public companies in similar situations.
Additionally, Representative Bill Huizenga of Michigan and chairman of the House Financial Services Oversight and Investigations Subcommittee, questioned whether the SEC needs to be blamed for its “horrible rulemaking and so-called regulation by enforcement” on a social media account that has been hacked.
Last August, a federal appeals court in Washington accused the SEC of not justifying its reason for denying an application from crypto asset manager Grayscale to convert its GBTC Bitcoin trust fund into a spot Bitcoin ETF.
Meanwhile, Charles Gasparino, senior correspondent at FOX Business, mentioned on X that securities lawyers have told the network that the SEC will have to investigate itself for market manipulation following a post that moved the price of Bitcoin “up and down” that was later claimed to be fake.
Currently, over a dozen ETF issuers, including Wall Street giants like BlackRock and Fidelity, are awaiting a decision from the SEC to list and trade their Bitcoin spot ETFs on the NYSE, Nasdaq, and Cboe BZX.
At the time of writing, Bitcoin (BTC) is trading at $45,991 – down 1.8% in the last 24 hours.