Bitcoin Price Spiked Almost 2.5% on Spot BTC ETF Fake Tweet: Sign of What to Expect if They’re Approved?

Key Takeaways

• Fake news about a spot BTC ETF approval caused Bitcoin’s market capitalization to plummet.
• Close to $220 million in liquidations occurred due to the market’s volatility.
• Ethereum (ETH) bucked the trend and increased in value during this period.

The market capitalization of Bitcoin (BTC) experienced a significant fluctuation, dropping by approximately $50 billion within 24 hours.

This shift was triggered by a misleading post about the approval of spot exchange-traded funds (ETF) that appeared on the U.S. Securities and Exchange Commission (SEC) official handle on X.

Fake News Sends Bitcoin Price on Rollercoaster Ride

According to data , Bitcoin’s market capitalization plummeted from $938 billion to a low of $890 billion following the emergence of this false information. However, the market cap has since made a partial recovery, sitting around $900 billion at the time of reporting.

Following the initial post that led to market confusion, there was a surge in futures trading activity. Data indicates that over $500 million in futures positions were opened within ten minutes. However, these positions, many of which were highly leveraged, suffered significant losses due to the volatile price swings that followed.

As a result, approximately $50 million in long positions were liquidated, while short positions saw an impact of around $36 million.

The impact of the fake news was immediate and substantial. Bitcoin’s value briefly jumped by 2.48% to nearly $48,000, capturing widespread attention and leading to premature celebrations among cryptocurrency enthusiasts eagerly anticipating such a significant development.

Bitcoin Price Sharply Corrects, Ethereum Defies Trend

Following the revelation that the SEC’s account had been compromised and the subsequent refutation of the ETF approval news by SEC Chair Gary Gensler, Bitcoin’s price rapidly fell to $45,100. This clarification led to a significant correction in the value of the leading cryptocurrency.

This volatile price movement extended beyond Bitcoin, affecting the broader cryptocurrency market. Major alternative cryptocurrencies such as Cardano (ADA) , Avalanche (AVAX) , Solana (SOL) , BNB , and XRP each experienced losses exceeding 2%. The overall cryptocurrency market also saw a decrease, declining by 1.15% over a 24-hour period.

In contrast to this general downward trend, Ethereum (ETH) , the second-largest cryptocurrency by market capitalization, demonstrated resilience and actually increased in value. ETH registered a gain of 2.8% during the same timeframe, defying the broader market’s reaction to the incident.

Close to $220 Million in Liquidations Occur

The recent tumultuous price movements in the cryptocurrency market led to nearly $220 million in liquidations, affecting over 71,000 traders holding various positions.

According to data from Coinglass , the majority of this financial impact was felt by traders who had placed bets on rising prices. These traders experienced liquidations totaling around $134 million. In contrast, traders who held bearish positions, or were shorting the market, faced losses of about $83.1 million during this time.

A significant portion of these losses, amounting to $126 million, was borne by investors who speculated on the price movements of Bitcoin and Ethereum, the market’s leading cryptocurrencies. Long traders, those betting on price increases for these assets, were particularly affected.

A notable event in this volatile period was the liquidation of a large $6 million long position in Bitcoin on the Bybit exchange. This represented the largest single liquidation order during the timeframe in question.

Furthermore, traders using Binance, a platform currently facing its own challenges, accounted for nearly 38% of the overall market losses, which equates to $82.35 million. Traders on the OKX platform saw liquidations of $72.82 million, while ByBit users experienced losses of $36 million.

What Happens When the Approval Does Come?

The recent event involving the fake approval of a spot ETF for Bitcoin highlights the market’s anticipation and the potential impact of such a development. While the initial fake news caused a price surge, it ultimately corrected, indicating that the market may be cautious about such a major announcement.

This also suggests that when the approval does officially come, it could lead to a more pronounced price reaction, perhaps even surpassing the 2.5% jump observed in the fake news event. Investors, having been misled once, might now wait for unambiguous confirmation before reacting, potentially leading to a larger-than-expected surge in Bitcoin’s price.