18 Oct, 2023

Bitcoin Prices Spike 10,66% Following a False Bitcoin ETF Alarm

bitcoin price spike false etf alarm

TL;DR

  • Bitcoin briefly surged to $29,892 in response to an inaccurate report about approving a spot ETF.
  • The news triggered about $180 million in liquidations across the crypto market, with Bitcoin accounting for ~$100M.

Cointelegraph Starts a Bitcoin Rally with a False Tweet

Bitcoin’s price increased above $28,000, marking its highest point in a week.

This surge happened on a particularly eventful Monday, marred by an erroneous post concerning approving a spot Bitcoin ETF.

For more information on Bitcoin ETFs and what’s happening in the industry, you can check out this article covering the SEC’s politics on Bitcoin ETF approval

Cointelegraph changing the original tweet
Cointelegraph Starts a Bitcoin Rally with a False Tweet | Source: X

During the early part of the US trading day, a false report falsely claimed that BlackRock’s proposed spot Bitcoin ETF had received approval. 

This misinformation triggered a flurry of trading activity and heightened market volatility. 

As a result, the price of Bitcoin experienced a sudden 10.66% spike, briefly approaching the $30,000 threshold.

A post on Cointelegraph’s X account sparked this activity with the initial statement: “SEC approves iShares Bitcoin spot ETF.”

They changed the tweet after 30 minutes to add the word “reportedly.”

Later, Cointelegraph removed the tweet and apologized for spreading false information.

Because of the tweet, some cryptocurrency traders bought Bitcoin and faced losses.

One major Bitcoin holder bought 20.5 wrapped Bitcoin for $600,000 and sold it for only $563,000 after debunking the news.

The Fake News Triggered a Ripple Effect 

The resurgence of volatility in the market was accompanied by significant liquidations.

In the past 24 hours, 40,723 traders saw their positions liquidated, amounting to $182.4 million in cryptocurrency losses. 

The amount of crypto liquidations in the last 24 hours
The Fake News Triggered a Ripple Effect | Source: Coinglass

Among these liquidations, the majority consisted of short positions, totaling $136.36 million, with Bitcoin trades accounting for $100 million of these liquidations.

Binance also suffered. The buy-side liquidity indicator, represented by the 0.1% ask depth on Binance, plummeted from 100 BTC to just 1.2 BTC. 

This abrupt shift occurred as market volatility intensified following the dissemination of a false report on social media claiming that BlackRock’s spot ETF had been approved.

As a result, several traders experienced ‘slippage’ as liquidity declined across major exchanges, including Binance.

Negative Impact on The Industry

While the price of Bitcoin turned back to the same levels, the industry has been dealt permanent damage. 

Imagine how this situation looks to a guy sitting at a hedge fund or other “real” financial institution. 

He sees this complete nonsense started by Cointelegraph and continued by all the crypto media outlets. 

He sees Bitcoin pump $2000 on fake news and aberration from Bitcoin maxis. Then he sees it retrace entirely in a matter of five minutes. 

The unpredictability of this situation makes the crypto market unsafe for many major players in the financial field. 

With such a precedent, the SEC has a valid reason for not granting a Bitcoin ETF acceptance, even for heavyweights like BlackRock and Franklin Templeton

However, thinking positively, can you imagine how big of a rally we’ll get once a Bitcoin ETF is approved?