Bitcoin dropped to around $45,000 before paring losses after a false post on the US Securities and Exchange Commission’s X account claimed that the agency had approved the issuance of ETFs holding the digital asset.
The regulator subsequently said it had not yet granted approval of spot-Bitcoin exchange-traded funds and that the X account had been compromised. Market participants were caught off guard by Tuesday’s cybersecurity incident. The SEC is widely expected by analysts to announce a decision about the ETF applications on Wednesday in the US.
Bitcoin traded at $45,900 as of 7:20 a.m. in London on Wednesday. The token had surged to a 21-month high of more than $47,000 on Tuesday as optimism grew that approval of the long-sought ETFs was imminent.
“I don’t think it will affect the process or what comes next,” said Ophelia Snyder, president of 21Shares, which is seeking to offer a Bitcoin ETF with ARK. “There’s no way after 10 years of work this could wrap up without any last minute drama.”
The ARK 21 Shares application must be addressed by the SEC by the end of Wednesday. Analysts expect approval of several applications at that time, following a slew of last-minute adjustments to official offering statements.
“Just add this to the long list of surprising plot twists and turns in the 10-plus year effort to bring a spot Bitcoin ETF to market,” said Nate Geraci, president of The ETF Store, an advisory firm.
SEC Chair Gary Gensler has repeatedly argued that crypto is rife with fraud and misconduct. The agency cracked down on the sector following a 2022 rout and collapses such as the bankruptcy of Sam Bankman-Fried’s FTX exchange.
But the SEC last year lost a key legal fight against crypto asset manager Grayscale Investments, spurring speculation that the regulator will have to acquiesce to the spot ETFs. The spat was over the $29 billion Grayscale Bitcoin Trust’s desire to convert into such a product.
Bitcoin has rallied 163% over the past 12 months, fueled by anticipation that the proposed ETFs will make the token more of a mainstream investment. But some analysts wonder whether Bitcoin is ripe for a pullback if and when SEC approval finally lands, since speculators may decide to bank profits.
The false post on the SEC’s X account was up for a number of minutes before the agency clarified that it was inaccurate. In that period, Bitcoin posted a relatively modest jump to almost $48,000 from about $46,700 before falling back toward $45,000.
“Bitcoin’s drop after the false SEC post shows the risk of an eventual ‘sell-the-news’ reaction to spot ETF approval, but much depends on where the token settles after the latest volatility,” said Tony Sycamore, a market analyst at IG Australia Pty.
If Bitcoin is trading in the $46,000 to $47,000 range before the announcement, we could see a burst to $51,000 after the ETF green light before the pullback begins, he said.