In 10 minutes, nearly $100 million was spent on the market to pay for CoinTelegraph's "false news", of which $72 million of short positions were liquidated and $26 million of long positions were liquidated.
Maybe this is a piece of fake news that will go down in history.
On October 16, Cointelegraph reported that the U.S. Securities and Exchange Commission has approved BlackRock’s iShares Bitcoin Spot ETF.
The picture comes from the Internet
"Bitcoin", "ETF", "APPROVE", when these three highly anticipated words are finally connected together, it is hard to believe that this is actually a piece of fake news worth $100 million.
20 minutes, $100 million liquidated
Bitcoin ETF has been a highly anticipated innovation in the global cryptocurrency market, and its development has affected the market's nerves. Looking back a few months ago, when the price of Bitcoin exceeded $30,000, the market was eagerly awaiting the approval of the ETF, but then the news of a delay triggered a sharp drop in the market.
However, just two hours ago, the market replayed this plot. Cointelegraph, a long-time cryptocurrency media, published a news article with an all-caps headline, announcing that the Bitcoin ETF had been approved by the SEC. The market was once again enthusiastic, and the market value of Bitcoin broke through multiple integers, soaring to more than $30,000, announcing the return of the bull market. The speed at which this news spread was amazing and incredible. It turned out that there are still so many enthusiastic followers in the cryptocurrency field.
However, the market soon began to realize the seriousness of the problem. Because of the historical level of news like Bitcoin ETF, mainstream media such as Bloomberg did not report it. James Seyffart, an ETF analyst at Bloomberg, questioned on social media whether the news was fake news, but no information could be found to confirm this.
Next, multiple sources came out to refute the rumor. According to Bloomberg Terminal data, BlackRock said that their Bitcoin spot ETF application is still under review by the SEC. Cointelegraph also urgently deleted the fake news tweets it had previously published.
As the widely circulated rumors were clarified, the price of Bitcoin fell back to above $27,000, ending the market frenzy that lasted just 10 minutes.
In these 10 minutes, almost $100 million worth of transactions in the market were consumed by this false news of only 7 words, the short position lost $72 million, and the long position also lost $26 million. It seems that no one is a winner.
The cryptocurrency field has always been full of false news. This is perhaps one of the industries with the most false information in the world because it is directly linked to money. We often see various news, from simple ones such as "a founder was shot dead by the police" to more complex ones such as "a project received investment from a top VC". But even if there are more such false information, their impact on the industry is usually controllable, and it is far less than such a serious news, which is conveyed by the mainstream media with only 7 words, and the impact on the confidence of the entire industry is so great.
One can only guess that Cointelegraph was perhaps too eager to believe the news was true, as they had no reason to intentionally do something that would be detrimental to their own industry.
This incident once again highlights the criticality of Bitcoin ETFs to the entire industry.
What Bitcoin ETFs mean to the industry
Once the Bitcoin spot ETF is officially listed in the United States, it will become a milestone event in the global blockchain field, because it means that the U.S. regulatory authorities have legally recognized the legal status of Bitcoin as a financial product, and Bitcoin will gain unprecedented influence.
If a spot Bitcoin ETF is eventually approved, it could have far-reaching implications for the Bitcoin and crypto markets that cannot be ignored for the following reasons:
Mainstream Exposure Expands: Spot ETFs will provide Bitcoin exposure to millions of new investors in an unprecedented way, including retirement accounts and brokerage accounts. This will provide more people with access to Bitcoin, driving market adoption and growth.
Increased legitimacy: SEC approval will strengthen the legitimacy of Bitcoin and reduce the skepticism of institutional investors and advisors towards Bitcoin as an investable asset class. This is expected to attract more traditional financial institutions and large investors to enter the market.
Positive price effect: Just as the launch of Bitcoin ETFs in Canada and Brazil ushered in a sharp rise in Bitcoin prices in 2021, the launch of spot ETFs in the United States may also stimulate investor interest and trigger a similar bull market. This will hopefully drive further increases in Bitcoin prices.
Coinbase CEO Brian Armstrong once mentioned in an interview that a Bitcoin spot ETF could benefit Coinbase and provide a new source of capital for the crypto ecosystem.
Although the Bitcoin ETF applications of many projects have been rejected by the SEC, they are still determined to submit new applications and update them tirelessly. This continuous dialogue with regulators shows positive signs. Several large financial institutions, including Ark Investment Management, 21Shares, Bitwise, WisdomTree and Fidelity Investments, are actively seeking approval from the US SEC.
According to data, as of October 16, at least 11 Ethereum-related ETF applications are awaiting approval from regulators, and these companies have not withdrawn their applications. The SEC has up to 240 days to make a decision after starting its review, and the first deadline for the next batch of ETF applications is October 17, and Bitcoin ETFs will usher in an intensive approval period.
The SEC is expected to respond to Bitcoin ETF filings from Fidelity, BlackRock, VanEck, WisdomTree, Invesco, and Galaxy on October 17. Meanwhile, it will respond to Valkyrie and Hashdex’s filings on October 19 and October 29, respectively. This will be an important moment with great significance for the crypto market and investors.
Long-term tug-of-war between spot EFTs
When it comes to Bitcoin ETF applications, we have to talk about Grayscale. Since October 2020, Grayscale has planned to apply to convert its BTC Trust into a spot exchange-traded fund (ETF), but during the past three years, the SEC has rejected it for various reasons.
Grayscale decided to formally file a lawsuit against the SEC a year ago, which also started a litigation tug-of-war between the two parties for more than a year. On the evening of August 30 this year, Grayscale won the lawsuit and overturned the SEC's decision to block the Grayscale ETF.
Due to the complexity of compliance and trading, institutional investors generally find it difficult to directly hold Bitcoin, while individual investors need to overcome the learning curve of cryptocurrency trading and storage. In this context, the Bitcoin Trust Fund (GBTC) managed by Grayscale Investments has largely solved this problem. As a result, many institutional investors actively participate in premium arbitrage activities by taking advantage of the product structure of GBTC.
Although GBTC tracks the price of Bitcoin, it is not always completely consistent, and its premium rate has always been an important indicator in the cryptocurrency market. However, before the crypto market began to show signs of a bear market, GBTC's negative premium trend seemed irreversible. In order to change the trust fund to a spot Bitcoin ETF and correct the "discount" problem of GBTC, Grayscale has been working hard to obtain approval from the SEC, but has been rejected three times.
However, on September 3, a JPMorgan research report pointed out that Grayscale’s recent success suggests that the SEC may be forced to approve pending Bitcoin spot ETF applications from various asset management companies (including Grayscale). This view has sparked heated discussions in the market.
On October 14, Bloomberg ETF analysts Eric Balchunas and James Seyffart posted on social media that Ark and 21Shares recently updated the prospectus for the spot Bitcoin ETF, adding at least five pages of new text. This shows that they have had a constructive dialogue with the SEC, which usually only happens when the ETF is about to be approved. Therefore, there is confidence that the spot Bitcoin ETF has a 90% chance of approval in Ark's application, which is due on January 10 next year.
In addition, according to Fox Business reporter Eleanor Terrett's message on social media on October 16, Grayscale has issued a statement saying that they will not seek to appeal the SEC's decision because the 45-day deadline for seeking a retrial stipulated in the Federal Rules of Appellate Procedure has expired. They are ready to convert GBTC into an ETF once approved by the SEC. This news has aroused market attention and expectations and has a positive impact on the cryptocurrency market.
But earlier on October 14, Bloomberg ETF analyst James Seyffart posted on social media that the dialogue between Grayscale and the SEC will begin next week, and the SEC is likely to make a new response to Grayscale’s application to "convert GBTC to a Bitcoin spot ETF" within the next two weeks.
On the same day, Reuters quoted people familiar with the matter as saying that the U.S. SEC does not plan to appeal the court's ruling in the case of "Grayscale's application to convert GBTC into a spot ETF", and the decision may pave the way for the SEC to review Grayscale's Bitcoin spot ETF application.
