The false news on the approval of a spot Bitcoin (BTC) exchange-traded fund (ETF) on Jan. 9 triggered the market to respond with a sell-the-news reaction.
On Jan. 9, the official X (formerly Twitter) account of the United States Securities and Exchange Commission (SEC) published a fake news post saying that the regulator has granted multiple Bitcoin ETF approvals for listing on registered exchanges. SEC Chair Gary Gensler subsequently took to X to alert that the SEC account was hacked and that the agency has not approved any spot Bitcoin ETF products.
According to K33 Research analyst Vetle Lunde, the fake news on ETF approval has given a glimpse of how the market could possibly react to actual approval news.
“The market showed its hands yesterday; the ETF approval rehearsal favors a sell-the-news reaction,” Lunde wrote on X. The analyst emphasized that very few viewed the SEC’s approval announcement with any suspicion in the first 14 minutes after publication.
“Immediately after the announcement, longs quickly crowded the market, enforcing a whipsaw in the following minutes. BTC was headed lower; the SEC ‘stepped in’ and formed a bottom after confirming the hack,” Lunde noticed.
The analyst referred to BTC surging to as high as $47,870 in four minutes after the fake approval tweet, to only face a sharp drop to $46,000 in the next 10 minutes.
Market reaction to fake Bitcoin ETF approval news. Source: X
Some prominent industry executives previously predicted that the market would likely react to ETF approval news by selling in the short term.
Cathie Wood, founder, CEO and chief investment officer of the potential Bitcoin ETF issuer ARK Invest, expects that some investors will sell on the news of ETF approval as there has been a major anticipatory move around this market event.
“That would be very short-term because what we think is going to happen here is that the SEC is going to be giving the spot Bitcoin ETF the green light for institutional investors to participate,” Wood suggested in late 2023, stressing that the long-term reaction is promising and more important.
Related: Bitcoin price briefly…
..
