Bitcoin sees $100M in liquidations after false spot ETF report

Category: Blockchain Crypto
Posted by Content Team

Bitcoin saw nearly $100 million in liquidations following a false report by crypto-focused media Cointelegraph about the approval of Blackrock’s spot Bitcoin ETF application.

On Monday, the price of Bitcoin (BTC) briefly surged from $27,900 to $30,000 after Cointelegraph posted the news on its X account. Cointelegraph took down the post within half an hour, but many users had already seen the posts, creating the price jump in the token.

“We apologize for a tweet that led to the dissemination of inaccurate information regarding the Blackrock Bitcoin ETF. An internal investigation is currently underway. We are committed to transparency and will share the findings of the investigation with the public once it is concluded within 3 hours,” wrote Cointelegraph on X.

The U.S. Securities and Exchange Commission (SEC) website does not display any approvals for a spot bitcoin ETF. BlackRock also came forward to confirm that it had not received approval for the spot ETF application.

The iShares Spot Bitcoin ETF application is still under review by the SEC,” said a spokesperson.

CoinGlass indicates that the abrupt increase in price to $30,000 caused the closure of short positions valued at $81 million. Furthermore, the subsequent decrease in price resulted in liquidations of long positions amounting to $31 million.

Liquidation occurs when a trading platform forcibly closes a trader’s leveraged position due to the partial or complete depletion of their initial margin. It usually happens when traders can’t meet the margin requirements for that particular position.

Grayscale challenges SEC’s ETF decision

The SEC has chosen not to challenge its loss in a case against Grayscale, as reported by Benzinga last Friday. The decision led to a four percent increase in Bitcoin prices during the Asian trading hours on Monday.

The federal agency initially rejected Grayscale’s application due to concerns about market surveillance and manipulation, similar to their reasons for rejecting other spot BTC ETF applications.

However, when Grayscale appealed to a higher judicial authority, the panel of judges criticized the SEC for its arbitrary and inconsistent reasoning. They pointed out that spot BTC ETFs aren’t necessarily riskier than futures-based ETFs traded in the U.S. without problems.

This development will likely increase the possibility of the Grayscale Bitcoin Trust GBTC transforming into a spot ETF. Analysts at Bloomberg have indicated a 90 percent likelihood that a Bitcoin ETF will launch by January next year.

Bloomberg Intelligence ETF analyst James Seyffart mentioned that an amended version of the Bitcoin ETF prospectus jointly managed by ARK Investment Management and 21Shares indicated a positive and productive discussion with the SEC.

Securing regulatory endorsement for a spot Bitcoin ETF would mark a significant milestone in achieving broader recognition and acceptance of the cryptocurrency, validating a controversial product for a broader investor base.

An ETF would offer a means for individuals in the market to invest in Bitcoin without the need to cover the expenses or handle the intricacies of holding the asset in their personal “wallets.” The investment product distributes the risks of bitcoin theft and volatility across the fund manager and investors.

The Bitcoin ETF provides a regulated and familiar investment format, enabling investors to monitor Bitcoin price changes in established financial markets, benefiting from the ETF’s liquidity and transparency. It also permits daily buying and selling of shares, similar to other publicly traded assets.

However, experts caution that investors should assess factors such as fees, tracking accuracy and the ETF’s custodian arrangements before participating in the market.