Spot Bitcoin ETF Not Approved Yet: Investors Brace for Impact, Reduce Positions Post-SEC Fake News

The fake news originating from a compromised X (formerly Twitter) handle triggered significant volatility within the Bitcoin market, and the drama was even more bizarre than expected, according to Greeks.live, a popular crypto options trading platform.

The sharp volatility resulted in a substantial increase in RV, while IV experienced a slight decrease.

Leverage Unwinding

The eagerly anticipated approval of a spot Bitcoin ETF by the SEC, slated for this month, is not here yet. But the stakes are high, and investors are glued to any announcement made by the watchdog. However, the false tweets from the official SEC X handle, erroneously declaring approval for all spot Bitcoin ETFs, triggered considerable market volatility.

Greeks.live said that its data’s logic diverges from the norm because the ETF has been traded for more than a month, and a large number of investors are betting on it, causing short-term IV to reach a recent peak.

The fake news had a dual impact – it highlighted the limited influence of the ETF on BTC for many investors while also diminishing the already fragile market confidence. As a response, numerous investors opted to reduce leverage and positions, engaging in a preemptive strategy of selling off assets early in response to the news.

When the Securities and Exchange Commission (SEC) tweet confirming approval was posted on January 9th, Bitcoin was trading near $46,700. Subsequently, the price surged, reaching $47,400 within one minute and hitting its peak of approximately $48,000 just four minutes later. Shortly after, the crypto asset swiftly retreated to $46,700 in just one minute, mirroring the price recorded five minutes before the announcement.

Following this, the price continued its descent, hitting a low of about $44,750 precisely one minute before Gary Gensler’s tweet. Following the revelation of the false news, Bitcoin stabilized within the range of $45,500 to $46,000.

According to Fineqia’s Research Analyst Matteo Greco, the price action analysis confirms that the market movement was a reaction to what was believed to be real news, resulting in a classic “sell-the-news event.” This pattern is typical in the market, where participants buy in the days leading up to a news event and then sell when the news becomes officially public.

Amidst the upheaval, in a statement to CryptoPotato, Greco asserted that it’s noteworthy that the SEC’s deadline for approving or rejecting the BTC ETFs filings remains on track for today. Analysts continue to anticipate a positive outcome.

SEC’s Internal Cybersecurity Under Scrutiny After X Account Breach

Despite being tasked with safeguarding investors, the SEC, which has previously rejected numerous proposals for spot Bitcoin ETFs, found itself at the center of controversy as its own X account was compromised.

Initial investigations suggest that the account lacked two-factor authentication (2FA), leading to widespread criticism and mockery directed at the federal agency. Gary Gensler, the agency’s head, had earlier emphasized the importance of securing accounts with 2FA, but the failure to adopt this precautionary measure has subjected the SEC to increased scrutiny.

I trusted the SEC and lost my leveraged long $BTC via liquidation. Can I sue the SEC? https://t.co/pvpNJWCLNy

— Crypto A S (@Crypto_A_S) January 9, 2024

Following the bizarre event, $66.66 million in longs were liquidated , along with $30.61 million in shorts over the past 12 hours.

Two US senators, J.D. Vance and Thom Tillis, have urged the SEC to furnish a report to Congress regarding the January 9 breach of its X account.

In a letter to SEC Chair Gary Gensler, the duo expressed “serious concerns” about the internal cybersecurity procedures, deeming the incident contradictory to the SEC’s mission. The senators have requested a report on the breach, citing the need for transparency and referring to a recent cybersecurity disclosure rulemaking.