Recent false information about the SEC’s approval of the first Bitcoin ETF contributed to a sudden increase in the value of this cryptocurrency, only to fall just as quickly. What were the consequences of these reports for the market, and what does the future look like in light of the upcoming ETF decisions?
The cryptocurrency world has always been a realm full of surprises and sudden twists, and recent events surrounding Bitcoin (BTC) only confirm this. The price of the most popular cryptocurrency in the world sharply rose towards 30 thousand dollars, only to stabilize around 28.2 thousand USD. What caused such dynamic movements? It turned out that false information about the approval by the U.S. Securities and Exchange Commission (SEC) of the first ETF fund based directly on Bitcoin was the cause.
Before we go any further, it’s worth explaining what an ETF (Exchange-Traded Fund) is. It’s an investment fund that is listed on the stock exchange and can be traded like shares. A Bitcoin ETF would allow investors to purchase shares in the fund, which in practice gives exposure to the price of Bitcoin without the need to directly own the cryptocurrency itself.
Information about the alleged approval of such a fund by the SEC turned out to be premature. Despite the quick debunking of the false reports, the markets reacted instantaneously, leading to liquidations totaling over 111 million dollars in just 24 hours. There is much to suggest that the false information was disseminated by the Cointelegraph portal, and later denied by both the SEC and BlackRock, a global asset management company whose ETF application is still under consideration by the U.S. commission.
There is now uncertainty among investors. The approval of a Bitcoin ETF in the United States would open the doors to significant funds from institutional investors, which could contribute to a significant increase in the cryptocurrency’s value and overall interest in it. Such a step could also provide additional liquidity and reduce the volatility with which Bitcoin often struggles.
The SEC is currently considering several applications for a Bitcoin ETF. There is a belief that they may be approved simultaneously, so as not to give an advantage to any of the funds. This prospect generates additional excitement, especially since the SEC has not appealed the decision regarding another significant investment in cryptocurrencies, which may be a sign of upcoming changes.
However, as Edward Snowden, known for revealing NSA secret documents, noted during the Bitcoin Amsterdam 2033 conference, the approval of a Bitcoin ETF could also mean increased regulatory interest and strict control, which has its advantages as well as challenges. Therefore, it is important for investors to be prepared not only for potential gains but also for a new regulatory reality that may emerge with greater adoption of cryptocurrencies by the financial mainstream.
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