Background: SEC's Twitter Account Compromised

On January 9, the U.S. Securities and Exchange Commission (SEC) found itself at the center of a cybersecurity incident when its official X (formerly Twitter), was compromised. 

The unidentified perpetrator used the hacked account to post a tweet falsely declaring the approval of spot Bitcoin exchange-traded funds (ETFs) in the United States. While the deceptive message was removed approximately 20 minutes later, the incident left an impression on social media.

In the wake of the Twitter hack, the SEC announced that it is actively engaging with law enforcement agencies to uncover the perpetrators and get to the bottom of the incident..

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Impact on Spot Bitcoin ETF Decision

Amidst the chaos caused by the Twitter hack, the looming question is whether this incident will influence the SEC's decision regarding spot Bitcoin ETFs. The SEC, known for its cautious approach to cryptocurrency-related matters, is expected to announce its decision this week. However, the Twitter controversy has prompted speculation about potential delays beyond the anticipated deadline of January 10.

According to CoinTelegraph, Dennis Porter, CEO of Satoshi Action Fund, acknowledged the possibility of a delay but highlighted that it largely depends on the SEC's intentions. U.S. attorney and commercial litigator Joe Carlasare expressed skepticism, deeming it extremely unlikely that the incident would significantly impact the decision.

Mati Greenspan, from Quantum Economics, raised concerns about the SEC using the false post as a reason to postpone the decision, citing historical instances where regulatory tactics influenced markets.

Moreover, Bloomberg ETF analyst Eric Balchunas remains optimistic about the official approval of spot Bitcoin ETFs, anticipating an announcement between 4:00 pm and 5:00 pm Eastern Time on January 10. This timeline aligns with historical patterns where the SEC has approved all ETFs simultaneously.

Anthony Tu-Sekine, a digital asset lawyer from Seward and Kissel, expressed doubt about the incident altering the likelihood of ETF approvals, labeling it as a puzzling development given the widely anticipated nature of the decision.

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Market Dynamics and Investor Reactions

Vetle Lunde, an analyst at K33 Research, provided insights into market reactions, noting that the swift response to the fake approval tweet hinted at a potential sell-the-news trend in the event of genuine approval.

Cathie Wood, founder and CEO of ARK Invest, weighed in on potential short-term market turbulence upon ETF approval. Wood anticipated some investors might sell on the news due to significant anticipation leading up to the decision. However, she emphasized the positive long-term implications as the SEC paves the way for institutional investors to participate in the spot Bitcoin ETF market.

Meanwhile, Eric Balchunas is already celebrating this day as the “ETF Approval Day.”