Summary

• A false report claiming that BlackRock had secured approval for a Bitcoin spot ETF caused Bitcoin's price to surge briefly before quickly reversing.
• The misleading news led to over $104 million in liquidations across long and short positions.
• Cointelegraph, the source of the false report, has apologized and is reviewing its social media procedures to prevent future incidents.
• Despite the false alarm, anticipation remains high for a potential Bitcoin spot ETF approval, which could significantly impact Bitcoin's price trajectory.
• The incident highlights the market's sensitivity to regulatory developments and the potential impact of a Bitcoin spot ETF on the broader crypto market.

The Bitcoin price experienced high volatility on Monday around 2PM UTC, briefly surging by 10% to nearly $30,000 before quickly reversing on the back of a misleading report.

The report falsely claimed that BlackRock Inc. had secured approval for its long-awaited Spot Bitcoin exchange-traded fund (ETF). 

While the news, if true, might have sparked off a new bull trend across the crypto markets, it definitely had dire consequences for traders, with over $104 million in long and short positions liquidated, according to data from tracker Coinglass during the hour. 

 What Exactly Happened?

Yesterday, crypto media platform Cointelegraph published breaking news on their X (formerly Twitter) claiming that the U.S. Securities and Exchange Commission (SEC) had approved BlackRock’s iShares Bitcoin spot ETF. Being a supposedly trusted source, the news was quickly disseminated across various crypto and traditional news outlets, triggering a sharp surge in the price of Bitcoin. 

However, within minutes of the announcement, Fox Business journalist Eleanor Terrett confirmed that the news was inauthentic and that BlackRock’s application was “still under review”. 

Cointelegraph later deleted the original tweet after editing and adding “reportedly” upon confirmation from BlackRock that the news was false. Following a public apology and internal investigation regarding the development, the media platform shared a detailed statement clarifying how it unfolded. 

“The news lead originated from an unconfirmed screenshot posted by an X user who claimed it was from the Bloomberg Terminal,” said Cointelegraph. 

The news outlet said it was conducting a thorough review of its social media management procedures and will make the required structural changes to ensure the incident does not reoccur. 

Blackrock CEO Fink on Bitcoin ETF rumor…

Providing his perspective on the company’s pending Bitcoin spot ETF application while appearing on 'The Claman Countdown' on Monday afternoon, BlackRock CEO Larry Fink said: 

"I can't talk about the specifics of anything, I think it's just an example of the pent-up interest in crypto. We are hearing from clients around the world about the need for crypto," 

Fink however declined to comment on the status of the application. 

Further Cause to Delay?

As what initially appeared to be a game-changing development turned out to be a false alarm, the entire episode perhaps reignites the endless debate surrounding the potential impact of a spot ETF tracking the largest cryptocurrency in the world. It also underscores the regulators' concerns about the safety of retail investors in the volatile crypto landscape. 

Despite multiple rejections, the chances of approval for a Bitcoin spot ETF, seemingly a long-sought holy grail for the crypto industry, have become increasingly likely. The development comes in the wake of the news that the SEC will not appeal the loss in its case against Grayscale as the fund looks to convert its GBTC into a spot ETF. 

TradFi and Bitcoin

Although unpopular, institutional interest in Bitcoin can be dated back to 2013 when the Winklevoss twins filed the first Bitcoin ETF, attracting interest in blockchain technology from major TradFi players such as Goldman Sachs, Citi Bank, Barclays, etc. 

Earlier in August, Bloomberg analysts James Seyffart and Elliot Stein, in a note, raised the chances of spot Bitcoin ETFs launching by the end of the year to 75%, from a previous 65% - citing the unanimity and decisiveness at which the United States Court of Appeals Circuit reached its decision in the recent case. The analysts believe that the odds will increase to 95% by the end of 2024.

Given that BlackRock’s proposed spot Bitcoin ETF would require the firm to acquire actual bitcoin, the development if approved, is poised to send the cryptocurrency’s value soaring, potentially triggering the next bullish cycle to the delight of cryptocurrency traders and investors. 

Despite the unfortunate liquidations that followed the false ETF alarm, the volatility indicates the potential impact of a spot Bitcoin ETF approval by the Securities and Exchange Commission on the general crypto market. 

As of writing, Bitcoin is trading at a spot price of $28,395, reflecting a negligible 0.91% change over the past 24 hours.