The fake announcement of the approval of the Bitcoin exchange-traded fund (ETF) resulted in the liquidation of nearly $90 million worth of Bitcoin long and short positions in less than an hour yesterday (Thursday).
According to Coinglass data, opportunistic traders opened over 500 million in futures positions within ten minutes of the first tweet from the compromised X (formerly Twitter) account of the Securities and Exchange Commission (SEC). However, about $50 million in long positions and about $36 million in short positions were liquidated with the price swings, showcasing the possibility of market manipulation risks.
A spike in open interest after the fake SEC post. Source: Coinglass
Following the first tweet from the compromised SEC account, Bitcoin jumped about 4 percent to $47,680 in a momentary spike. However, it went down immediately to as low as $45,400.
Liquidations on futures positions happen when traders take leverage long and short positions, and the market moves in the opposite direction. If those positions do not have enough margin, the exchanges usually liquidate the positions.
A word to the wise, from a man of few words. #bitcoinisinteresting https://t.co/wantGiAIqJ pic.twitter.com/x5MPbElEev
— Bitwise (@BitwiseInvest) December 18, 2023
A Market Manipulative Mistake
SEC’s Chief, Gary Gensler, quickly posted on X that the official X account of the regulator was hacked, and the false announcement was taken down within 30 minutes. Now, many crypto big-shots are accusing the regulator of market manipulation.
As reported by Finance Magnates, the safety team at X confirmed that the SEC account “did not have two-factor authentication enabled at the time the account was compromised,” raising massive security lapses on the part of the regulator.
An SEC spokesperson also confirmed that the regulator “will work with law enforcement and our partners across government to investigate the matter.”
The false announcement of Bitcoin ETF approval from the SEC’s compromised X account came only a day before the deadline for the decision on the Ark 21Shares Bitcoin Trust. Despite the security blunder, market commentators expect no delay in Wednesday’s regulatory decision.
Fwiw, at least one prospective spot bitcoin ETF issuer is concerned SEC “hack” could result in approval delay…
My take? There’s a *hard* deadline tomorrow. All indications point toward approval.
There’s a regulatory process to follow here. That doesn’t involve…
