The false announcement of the approval of a Bitcoin exchange-traded fund (ETF) sent shockwaves through the cryptocurrency market, resulting in the liquidation of approximately $90 million in Bitcoin long and short positions within just one hour on Thursday.
Coinglass data revealed that opportunistic traders swiftly opened more than 500 million dollars in futures positions within ten minutes of the initial tweet from the compromised Twitter account of the Securities and Exchange Commission (SEC), now known as “X.”
However, the price swings led to the liquidation of approximately $50 million in long positions and $36 million in short positions, highlighting the susceptibility to market manipulation risks.
In response to the compromised SEC account’s tweet, Bitcoin experienced a momentary 4 percent surge, briefly reaching $47,680 before plummeting to as low as $45,400.
Liquidations of futures positions occur when traders hold leveraged long and short positions that move against them, and their positions lack sufficient margin.
In such cases, exchanges typically liquidate these positions.
Gary Gensler, the SEC’s Chief, promptly announced on X that the official SEC account had been hacked, and the false announcement was removed within 30 minutes.
Nevertheless, several cryptocurrency industry leaders have accused the regulator of market manipulation.
Security experts at X confirmed that the SEC account did not have two-factor authentication enabled at the time of the compromise, exposing significant security lapses on the regulator’s part.
An SEC spokesperson stated that they would collaborate with law enforcement and government partners to investigate the incident.
The false announcement came just one day before the deadline for the decision on the Ark 21Shares Bitcoin Trust, raising concerns about potential delays.
However, market observers anticipate that Wednesday’s regulatory decision will proceed as planned.
It remains unclear whether the SEC will approve only one Bitcoin ETF or address multiple applications simultaneously.
The SEC has received numerous applications for spot Bitcoin ETFs, with BlackRock’s entry into the space last year altering the landscape.
Market participants are optimistic about the approval of a Bitcoin ETF, with two Bloomberg analysts giving it a 90 percent probability.
The recent rally in Bitcoin’s price also reflects investor optimism.
Several Bitcoin ETF applicants have launched advertising campaigns to promote Bitcoin and their pending ETFs.
If approved, these ETFs will be listed on US stock exchanges, potentially sparking high demand among retail and institutional investors by simplifying access to cryptocurrency assets without the need for separate wallets or exchange accounts.