Fake Bitcoin ETF Approval Tweet Causes $90M in Liquidations

Those tweets caused bitcoin prices to immediately spike to $47,680 from the $46,800 level. It then fell as low as $45,400 as the tweets were found to be fake.

AccessTimeIconJan 10, 2024 at 7:30 a.m. UTC
Updated Jan 26, 2024 at 5:04 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Price volatility following a series of fake tweets from the U.S. Securities and Exchange Commission (SEC)’s X account caused nearly $90 million worth of bitcoin (BTC) long and short positions to be liquidated, showcasing manipulation risks associated with the industry.

Hackers caught hold of SEC’s X account on Tuesday, using it to post a nod for the much-awaited bitcoin exchange-traded fund (ETF) approval decision. It later posted “$BTC,” before both tweets were promptly deleted.

Those tweets caused bitcoin prices to immediately spike to $47,680 from the $46,800 level. It then fell as low as $45,400 as the tweets were found to be fake.

Punters and automated bots, however, reacted quickly to the tweets. Over $500 million in futures positions were opened in a ten-minute period following the initial post, data shows. But the highly-levered positions took a hit as prices whipsawed: Some $50 million in longs were liquidated while $36 million in shorts were impacted.

Open interest spiked after the fake SEC post. (Coinglass)
Open interest spiked after the fake SEC post. (Coinglass)

Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader's initial margin. It happens when a trader is unable to meet the margin requirements for a leveraged position (fails to have sufficient funds to keep the trade open).

Such data is beneficial for traders as it serves as a signal of leverage being effectively washed out from popular futures products – acting as a short-term indication of a decline in price volatility.

A decision on thirteen proposed bitcoin ETFs is expected on Wednesday, with Bloomberg analysts placing approval odds at over 90% and crypto market bettors a relatively smaller 85%.

Meanwhile, some crypto market participants criticized the SEC’s seemingly lax security measures to protect its account – even asking how the financial regulator could safeguard trillion-dollar markets if it couldn’t protect its social accounts.

Edited by Parikshit Mishra.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


Read more about