Sophia’s Thoughts on the fake BlackRock ETF news
Yesterday, the market rallied after it was reported that the BlackRock spot Bitcoin ETF had been approved. But that was fake news. What does this all mean for crypto?
These are Sophia's Thoughts:
A report by Cointelegraph that the BlackRock spot Bitcoin ETF had been approved triggered a crypto rally.
But the news was fake and the market retracted. The correction was not as strong and Bitcoin continues to trade in the positive.
The incident raised questions about the crypto market’s ability to withstand false information. It may reinforce the SEC’s concerns about potential market manipulation.
But it also showcased the upward potential for the crypto market when the SEC does indeed approve a spot Bitcoin ETF. This is expected to happen in the not-so-distant future.
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🚀 Last week’s market performance
Bitcoin (BTC) and the crypto market were down most of the week. That changed on Monday when false news about the approval of BlackRocks spot Bitcoin ETF led to a temporary rally and partial reversal. Both ended the week close to 3% up. Bitcoin (BTC) is still trading above USD 28,000.
The best performing coin of the week was Bitcoin SV (BSV). It gained 18% in response to the false news about the spot Bitcoin ETF approval. The biggest loser of the week was Radix (XRD). It lost 10%. Not even news about a partnership between Radix and Hacken could prevent the massive decline of XRD over the last 7 days.
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🗞️ Fake news
Yesterday, a false report concerning the approval of BlackRock’s iShares spot Bitcoin Exchange-Traded Fund (ETF) was propagated by Cointelegraph. That triggered a significant price spike in Bitcoin to nearly USD 30,000. This misinformation led to over $70 million in shorts getting liquidated as traders reacted to the purported approval.
However, the story was quickly debunked by a Fox Business reporter. She claimed that BlackRock had denied the news. That caused the price of Bitcoin to retract below USD 28,000 within 15 minutes of the price spike. More than USD 30 million in long positions were liquidated during the correction.
Cointelegraph issued an apology and has since deleted the original tweet. They mentioned initiating an internal investigation to ascertain the cause of this misinformation. But the fiasco led to a surge and subsequent sharp decline in Bitcoin prices — what could be interpreted as a pump-and-dump market manipulation scheme.
🕵🏻♂️ The Cointelegraph investigation
Cointelegraph issued the results of their investigation within a few hours from the fake news leak. The false information originated from an unverified post on X by a user who claimed it originated from the Bloomberg Terminal. The post was shared in Cointelegraph’s internal Telegram channel by an account that has since been deleted. Cointelegraph shared the information on social media, which was then also supposedly picked up by Reuters.
But the false information was disseminated by a Cointelegraph employee without editorial consent, breaching Cointelegraph’s standard verification procedures for breaking news. The internal examination unveiled lapses in their social media management processes, particularly around the authentication of breaking news before publication. Following the event, Cointelegraph is implementing stringent reviews and audits of its social media management protocols to avert similar occurrences in the future.
🗣️ People are talking
The fake news event sparked discussions within the crypto community. Many criticized Cointelegraph for its rush to be the first to break the news at the expense of accuracy. Cointelegraph’s Editor-in-Chief, Kristina Lucrezia Cornèr, faced a new round of criticism after suggesting that the pressure to break news first was a contributing factor to the error, pointing towards societal and technological pressures as the root of the problem.
In addition, rumors swirled around a possible pump-and-dump market manipulation scheme orchestrated by a Cointelegraph intern. The speculation gained traction when Rollbit displayed a screenshot of an account named “Cointelegraph” profiting over $2.2 million from a 50x leveraged position, opened on the day the false news broke. However, the Wolf Of All Streets Scott Melker debunked the rumors by sharing a screenshot of Rollbit’s trading leaderboard that did not feature the purported account.
🔍 Will a spot Bitcoin ETF actually be approved?
The reaction to the fake news regarding the approval of a spot Bitcoin ETF gave the crypto community a glimpse of what might unfold when an actual ETF gets approved. The short-lived price surge following the false news suggested that a real ETF approval could trigger a significant price increase for Bitcoin. Some analysts predict a true ETF approval could push Bitcoin’s price above USD 100,000.
Standard Chartered Ups 2024 Bitcoin Price Prediction To $120,000 (Nasdaq)
Ark Invest Now More Confident in Bitcoin Reaching $1.5 Million, CEO Says (Bitcoin.com)
Bitcoin Price Predictions For 2024: Insights From Major Banks To Hedge Funds (NewsBTC)
Such predictions stem from the anticipation of heightened demand from institutional investors, which an ETF could facilitate. Estimates suggest that up to $17.7 trillion of institutional money could flow into Bitcoin ETF products, dwarfing existing futures ETF volumes and marking a critical point in the broader acceptance of cryptocurrencies in traditional financial systems. Consistent with this narrative, BlackRock CEO Larry Fink himself stated yesterday that “the rally today is about a flight to quality”.
However, the implications of an actual ETF approval could be multi-faceted. There are concerns about a possible sell-off post-ETF approval, akin to the “buy the rumor, sell the fact” phenomenon observed in traditional markets. Pantera Capital CEO Dan Morehead suggested such a possibility, drawing parallels with past events like the listing of Bitcoin futures on CME in 2017 and Coinbase’s direct listing in 2021. While opinions vary, most analysts argue that an ETF approval would be bullish for Bitcoin in the long term.
But yesterday’s events might have affected the likelihood that we will see a spot Bitcoin ETF approval. Prior to yesterday, there was a consensus among analysts that the approval of a spot Bitcoin ETF by the SEC was imminent. The main concern of the SEC: the possibility of market manipulation in the Bitcoin spot market. Yesterday’s events are sure to reinforce these concerns. Some believe that yesterday’s incident might have jeopardized the chances of a spot Bitcoin ETF approval by demonstrating the market’s vulnerability to misinformation. The one saving grace: this can also happen in any other market. And it has happened before, as flagged by several X users.
⚠️ What else is happening in crypto?
Here are other news developments that we are closely tracking:
The SEC decided not to appeal the ruling rejecting the original SEC denial of Grayscale’s application to convert its Bitcoin trust into a spot Bitcoin ETF. We are now waiting to hear from the court on how it expects its ruling to be exercised. The SEC may reconsider a new application by Grayscale and may still be able to reject a new application for a different reason.
The Sam Bankman-Fried trial entered its second week. Revelations from FTX’s operations are attracting negative attention to the cryptocurrency sector.
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