The rise and fall of Bitcoin caused by fake news, what is the future of Bitcoin spot ETFs?

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2023-10-25 11:45:40

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Be cautious of information on the internet; the best source of information about the SEC is the SEC itself.

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Author: veDAO Research Institute

Is the BTC ETF about to be approved? Just last night, BlackRock threw us a curveball.

Yesterday, news broke that BlackRock's iShares Bitcoin Trust was listed on the DTCC website, causing a stir on social media. Soon after, DTCC removed the relevant entries from BlackRock, and upon relisting, changed the Create/Redeem status from Y to N.

This was not the only mix-up.

Within an hour on October 16, a piece of news about the approval of a spot Bitcoin ETF sent the market into a frenzy. As Bitcoin's price surged and then quickly fell back, nearly $100 million in positions were liquidated.

The source of the news was a tweet from Cointelegraph posted on X, which was later confirmed to be false. However, despite the market's rapid adjustment, the reputational and legal implications may not be over. As members of the crypto community shouted "malpractice," let's review what happened and the potential consequences and impacts.

The Timeline of the Fake News Incident

Cause

The crypto community has been holding its breath for news on the first spot Bitcoin ETF in the U.S. When, around 9:30 PM Beijing time on October 16, Cointelegraph tweeted that the U.S. Securities and Exchange Commission (SEC) had approved BlackRock's iShares ETF application.

Within minutes, this news was shared by financial media outlet Benzinga, and then reported by one of the world's most trusted news agencies, Reuters. Unsurprisingly, Bitcoin's price suddenly skyrocketed, and the entire market quickly entered a euphoric bull market sentiment. According to CoinMarketCap, Bitcoin's price surged from $27,962 to $29,388 in about five minutes, an increase of nearly $1,500, or about 5%.

Just minutes after the initial news was published, Cointelegraph tweeted again, adding the word "reportedly" at the end of the previous content. This suggestive modification became the most amusing meme of the day.

Doubts

As reporters rushed to verify the news, it seemed difficult to find evidence to confirm it. Then, 11 minutes after Bitcoin's price surged, Fox Business reporter Eleanor Terrett tweeted that a source from BlackRock confirmed the news was incorrect— their application was still under review. Bloomberg analyst Eric Balchunas and CoinDesk subsequently also reported to debunk the false news. Twenty minutes after Bitcoin broke $29,000, it plummeted to $27,855—slightly below previous levels.

Source of Misinformation

However, at first glance, the cause of this incident seems to be the initial report's lack of rigor. Crypto detective @ZachXBT discovered a Telegram channel where a user posted the exact same fake news 39 minutes before Cointelegraph's tweet. Cointelegraph later confirmed that this was the source of their news.

In a later tweet that day, Cointelegraph conducted a quick investigation. They found that before posting breaking news on social media, they did not follow the procedure for verifying news sources. Cointelegraph stated that this incident was purely human error, a communication issue between the news and social media teams, and that they did not follow standard operating procedures.

Meanwhile, at an event in Dubai on the 16th, Cointelegraph's editor-in-chief Kristina Lucrezia emphasized that the pressure of digital news contributed to this mistake: "When we are constantly under pressure to be the first to report every piece of news, this kind of thing happens. This is not just a news issue, but a societal and technological issue… If you're not first, you're last, and that's a big problem." However, the crypto community did not sympathize with this predicament.

On October 17, The Block's editor-in-chief Tim Copeland shared a screenshot on X from an individual claiming to be behind this incident, who stated they did not profit from the sharp rise in Bitcoin's price: "When I heard what happened, I really… trembled for several hours."

Possible Market Manipulation?

Many crypto KOLs questioned whether there was any economic motive behind the erroneous reporting. Many speculated whether this was a blatant case of market manipulation, with some suggesting that someone could end up in jail because of it. Even more claimed that the SEC's reluctance to approve a spot Bitcoin ETF was due to concerns about the risk of market manipulation, and now it seems that approval may not even be necessary.

This accusation, whether implied or explicit, points to a reporter, editor, or other staff member establishing a short position in Bitcoin futures or options contracts, preparing for sudden market changes.

As of now, it seems that no one affected by the market volatility has explicitly made these accusations to regulators. If this were to happen, the situation could escalate quickly. After all, the current title of the SEC resonates throughout the crypto world as a cryptocurrency skeptic.

In response to this incident, the regulator advised readers to "be cautious of information on the internet. The best source of information about the SEC is the SEC itself."

Subsequent Impacts

Market Sentiment

Second: 2023/10/19

Third: 2024/01/17

Final Deadline: 2024/03/19

Latest Update: Application not yet updated in response to SEC

SEC Filing:

https://www.sec.gov/Archives/edgar/data/0001841175/000138713121001118/valkyrie-s1_012221.htm

New Developments on Bitcoin ETF

Despite mixed and contradictory news regarding the approval process of BlackRock's Bitcoin spot ETF, the market has entered a new round of frenzy as Bitcoin briefly surpassed the $35,000 mark. Will there be further reversals? What other news should be noted?

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