Bitcoin experienced a sudden rise on Monday, briefly reaching new heights before relinquishing most of its gains. The upswing followed a crypto media report falsely claiming that U.S. regulators had approved BlackRock’s high-profile application for a crypto investment product.
Market Reactions: Bitcoin’s Price Swings and Sensitivity
Known for its inherent volatility, Bitcoin was last seen trading at a 3.82% increase, reaching $28,211. It had spiked by as much as 10% to $29,900 earlier in the day, marking its highest point since August.
The initial report suggesting the approval came from Coin Telegraph, a prominent crypto news outlet. They stated that the U.S. Securities and Exchange Commission (SEC) had given the green light to BlackRock’s application for a spot bitcoin exchange-traded fund (ETF). However, this information was later retracted by the Coin Telegraph.
False Reports Unravel: BlackRock Denies Approval
The crypto market took a sharp downturn when a Fox Business reporter, using the social media platform X, conveyed BlackRock’s denial of the report. Confirming this, BlackRock told Reuters that “the iShares Bitcoin ETP application is still under review by the SEC,” a sentiment echoed by sources close to the SEC who confirmed the pending status of the application.
The incident underscores the sensitivity of crypto markets to potential positive developments. Ben Laidler, the global markets strategist at eToro, remarked, “Crypto markets have just shown how sensitive they are to any potential good news, with their premature rally today on rumors of the approval of a spot bitcoin ETF.”
In response to the misinformation, Coin Telegraph issued an apology on X, acknowledging the dissemination of inaccurate information. The outlet initiated an internal investigation, committing to transparency by sharing its findings with the public within three hours. The initial post was deleted as a corrective measure.
Awaiting Regulatory Clarity: Impact on Pending ETF Applications
The crypto market has been eagerly anticipating updates on various pending spot bitcoin ETF applications, with expectations that their approval could significantly impact the sector. The SEC has consistently denied such applications, citing concerns about the lack of demonstrated investor protection from market manipulation.
Joseph Edwards, head of research at London crypto firm Enigma Securities, noted, “The move does show how monomaniacally obsessed the bitcoin market is with the coming spot ETFs.”
Looking Ahead: Managing Headline Risks and Market Dynamics
While the news of the SEC approving a spot bitcoin ETF proved to be a “false alarm,” Lucas Kiely, chief investment officer at Yield App, sees it as a “good dress rehearsal” for the imminent regulator’s decision. Kiely emphasized the headline risk: “The market will move markedly either way depending on the decision.”
Reuters had previously reported on October 13 that the SEC would not contest a recent court ruling that deemed its rejection of Grayscale Investments’ application for a spot bitcoin ETF as incorrect. The District of Columbia Court of Appeals is expected to issue a mandate soon, likely instructing the SEC to revisit Grayscale’s application. The cryptocurrency industry keenly watches this development.
