Here’s an afternoon reminiscent of the great hours of bull market madness. In the space of a few minutes, the price of Bitcoin (BTC) suddenly soared by more than $2,000, before plunging back just as quickly. What happened? We explain.
Bitcoin explodes… and plunges again!
The cryptocurrency market seems to be back to good old habits at the start of this week. Just as the Bitcoin (BTC) price continued to hover around the $28,000 mark, it suddenly soared to touch $30,000, only to plunge right back down again.
What accounts for this spectacular 7% rise? A speculative announcement by Cointelegraph, a reputable American media outlet. Cointelegraph reports that the Securities and Exchange Commission (SEC) has approved the launch of the iShares Bitcoin Spot ETF
Cointelegraph’s tweet, deleted minutes after publication
Obviously, this announcement spread like wildfire on social networks. However, several sources report that there is no official proof, and that we are dealing with false information. This hypothesis is supported by Eric Balchunas and James Seyffart, two well-known analysts at Bloomberg.
In the space of a few minutes, Bitcoin’s price deflated as quickly as investors’ euphoria. At the time of writing, it is back around $28,000, as you can see from the following graph:
Bitcoin price evolution in 5 min time scale, as of October 16, 2023
The Bitcoin spot ETF has become a hot topic in the cryptocurrency world. Indeed, it would give US institutional investors easier access to the cryptocurrency market and could pave the way for wider cryptocurrency adoption.
It’s worth noting that over $100 million was liquidated during these moves on Bitcoin, mostly on short trading positions (short-term downside bets).
Although recent news – notably the SEC’s defeat of Grayscale – leads us to believe that a spot Bitcoin ETF could soon be validated, it is vital to check one’s sources, not to get carried away by speculation, and to wait for official confirmation from a relevant player before making any investment decision.
