False Tweet About Bitcoin ETF Approval Results in $90 million in Liquidations

Almost $90 million worth of bitcoin (BTC) long and short positions had to be liquidated due to price volatility that followed a series of fictitious tweets from the U.S. Securities and Exchange Commission (SEC)’s X account. This illustrates the industry’s risk of manipulation. On Tuesday, hackers gained access to the SEC’s X account, which they used to publicly endorse the much-anticipated approval of the bitcoin exchange-traded fund (ETF). Afterwards, it tweeted “$BTC,” and both of those were quickly removed.
The price of bitcoin shot up to $47,680 from $46,800 as soon as those tweets were published. It then dropped as low as $45,400 when it was discovered that the tweets were fraudulent. Yet the tweets were rapidly picked up by automated bots and punters. Data reveals that within ten minutes of the first post, almost $500 million worth of futures positions were opened. Yet, the sharp fluctuations in prices hurt the highly-levered positions, affecting $36 million in shorts and liquidating about $50 million in longs.
When a trader’s leveraged position is forcibly closed by an exchange as a result of losing all or a portion of their initial margin, this is known as liquidation. This occurs when a trader does not have enough money to maintain an open position, or is unable to match the margin requirements for a leveraged position.
These kinds of statistics are helpful to traders because they indicate that leverage is eventually being removed from popular futures products, which in turn indicates a short-term decrease in price volatility. On Wednesday, a decision regarding thirteen proposed bitcoin ETFs is anticipated; according to Bloomberg analysts, bitcoin market bettors have a somewhat smaller 85% chance of approval compared to over 90% for the proposed ETFs. Others involved in the cryptocurrency market, however, questioned how the financial regulator could protect trillion-dollar markets if it couldn’t secure its social media accounts. They questioned the SEC’s apparent lack of security procedures for protecting its account.