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Bitcoin Price Manipulated by BTC ETF News Causes Huge Liquidations

Published October 16, 2023 3:21 PM
Teuta Franjkovic
Published October 16, 2023 3:21 PM

Key Takeaways

  • The price of BTC rose to almost $30,000 before backtracking on rumors that the SEC had approved the iShares Bitcoin spot ETF.
  • Debunking rumors of approval, BlackRock emphasized that their ETF proposal is still being considered.
  • Rumor-induced market volatility led to the liquidation of trades worth approximately $105.28 million in just one hour.

The Grayscale Bitcoin Trust (GBTC), a first for the US, might become an ETF as a result of the SEC’s decision to appeal. Traders have predicted that Bitcoin’s value will continue to grow as a result of this event.

However, that time has not yet come — although it felt like it had — as the price of BTC nearly reached $30,000 following rumors that the US Securities and Exchange (SEC) had approved the spot Bitcoin ETF. After BlackRock refuted the rumors, the price began to decline back to the $28,000 mark.

Over $75 Million in Liquidations as Rumor-Induced Volatility Strikes

Due to the rumor-induced volatility, trades worth more than $105.28 million were settled in a single hour. Particularly, deals for $73.25 million in shorts and $32.03 million in longs were settled.

According to recent data from YCharts , as of October 13, GBTC’s discount to Bitcoin’s net asset value (NAV) was 15.87%. A key statistic that shows how much a mutual fund or ETF is trading below its net asset value is the discount to NAV. It acts as a gauge to determine the discrepancy between a security’s trading price and its true value.

Credit: YCharts

The submission of spot Bitcoin ETF applications by BlackRock and other financial institutions in mid-June appears to have impacted the lowering of GBTC’s discount. The discount shrank from 44% on June 15 to 26.7% by July 5 and has been shrinking ever since, according to data.

Bitcoin’s price increased by more than 2.5% in the last day and by 4% overall during the weekend, placing it just below the significant $28,000 milestone.

The increase in Bitcoin’s value  has caused a large reverberation throughout the whole cryptocurrency market, resulting in a total of $75 million in liquidations during the last 24 hours.

Of this sum, $30 million in short liquidations were brought on by the rise in Bitcoin’s price alone. A study of the liquidations showed that short liquidations, which accounted for $62 million of the total, predominated over long liquidations, which accounted for the remaining $13 million.

According to Watcher Guru, another $65 billion was liquidated right after fake news regarding SEC’s approval of Bitcoin ETF.

Altcoins Like LOOM Follow Suit With Dramatic Surges

The rest of the sector also followed  the original crypto in this rally (as is usually the case), which is why shorts around the sector have taken a beating today. The table below shows what the individual contribution towards this liquidation squeeze has looked like for the different symbols in the sector.

Credit: Coinglass

In line with expectations, Bitcoin accounts for the greatest portion of liquidations ($31.5 million), followed by Ethereum ($13.06 million). Interestingly, Loom Network (LOOM), although being only the 71st largest asset in the industry by market valuation, is third on this list.

Perhaps as a result of the altcoin’s recent dramatic surge of more than 113%, there has been so much interest in it on the futures market.

Bitcoin Open Interest Surges Back to Life After The Squeeze

The quantity of contracts connected with the asset that is open on the futures market, as measured by the Bitcoin open interest, has increased  since the liquidation flush, as noted by CryptoQuant analyst Maartunn.

Even though many traders were being liquidated, it appears that additional speculators have entered the market. Since high open interest typically indicates volatility, the indicator’s return to its pre-dive levels could indicate that BTC will experience more abrupt price movements in the near term.

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