May 29, 2024
Bitcoin ETF Approval Triggers Sell-the-News Response
Bitcoin News

Bitcoin ETF Approval Triggers Sell-the-News Response

The fraudulent announcement on X regarding the approval of a spot Bitcoin exchange-traded fund (ETF) by the United States Securities and Exchange Commission (SEC) triggered a market sell-off in a classic “sell-the-news” reaction. On January 9, the official SEC X account posted a fake news update claiming the approval of multiple Bitcoin ETFs for listing on registered exchanges. SEC Chair Gary Gensler quickly clarified on X that the SEC account was hacked, and no spot Bitcoin ETF approvals had been granted.

Analyst Vetle Lunde from K33 Research observed the market’s swift reaction to the fake news, indicating a potential sell-off in response to actual approval news. Lunde noted that immediately after the announcement, long positions crowded the market, causing a rapid BTC surge to $47,870 within four minutes, followed by a sharp drop to $46,000 in the next 10 minutes.

Cathie Wood, CEO of ARK Invest, a potential Bitcoin ETF issuer, anticipates a short-term sell-off by some investors upon actual ETF approval due to the significant anticipatory move around this market event. Wood emphasized the importance of the long-term reaction, expressing optimism about the SEC giving the green light for institutional investors to participate.

Analysts from QCP Capital share the sentiment that the potential ETF approval is already priced in, expecting a muted market reaction. They noted that the initial response to the fake approval was subdued, with BTC unable to trade out of the resistance area, indicating a clear “sell-the-news” scenario.

Traders on X echoed this sentiment, anticipating similar price action as the community widely expected the SEC to approve multiple Bitcoin ETFs on January 10. The sell-off following the fake news serves as a valuable indicator of market sentiment, highlighting the potential for a similar reaction when the actual approval news is announced.

Photo by Leeloo Thefirst

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