Cryptocurrencies saw volatile trading Wednesday as traders awaited a decision from the Securities and Exchange Commission on whether to approve spot Bitcoin exchange-traded funds. Digital assets have been buoyed for months by ETF approval hopes, with anticipation reaching fever pitch after the agency’s social media account was breached on Tuesday and falsely posted that the funds were approved.
The price of
has fallen 2% over the past 24 hours to $45,600, lower than where it was trading—around $46,900—before the SEC’s X account posted after 4 p.m. Eastern time Tuesday that it had approved the first spot crypto ETFs. Bitcoin prices briefly spiked above $48,000, the highest levels since early 2022, before tumbling lower after SEC Chairman Gary Gensler posted on social media that the agency hadn’t approved the listing or trading of the funds.
In a statement, the regulator said that it had determined there was brief unauthorized access to its official X account by an unknown party, and that it would work with law enforcement and government partners to investigate.
An X account Tuesday evening said its own preliminary investigation found that the compromise was due to someone getting control of a phone number associated with the account rather than a breach of X’s own systems. The SEC didn’t have two-factor authentication enabled at the time of the compromise, X said.
The SEC didn’t immediately respond to a request for comment on X’s post.
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Appropriate market surveillance mechanisms to protect against fraud and market manipulation in crypto have been a key concern of the SEC, which repeatedly has delayed decisions on whether to approve spot Bitcoin ETFs over the past year. The agency now faces a final deadline of Wednesday for a number of proposed funds, which has brought anticipation across the crypto world to boiling point this week. Frenzied trading after the disingenuous SEC post is evidence of the froth.
“The pump-and-dump effect of crypto scams has come into sharp focus, after wild swings in Bitcoin. Fans have been holding out for regulatory approval of spot Bitcoin exchange traded funds, and fraudsters have clearly used this desire for legitimacy to again cheat the system,” said Susannah Streeter, an analyst at broker Hargreaves Lansdown. “Still, Bitcoin remains at two-year highs as official approval is still expected to be granted for the first wave of ETFs.”
Indeed, despite Tuesday’s false start, analysts widely expect spot Bitcoin ETF approval in the U.S. to be a matter of when, not if. And while some market participants are bracing for a “buy the rumor, sell the news” situation, there remains evidence that the approval of these funds will be supportive of crypto prices in the longer term.
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A spot Bitcoin ETF may usher in a fresh wave of interest in digital assets, especially among institutional investors, some of whom have avoided crypto amid years of regulatory scrutiny but could pile in with the SEC’s blessing. These funds, which would hold Bitcoin tokens themselves—and not just futures contracts tracking the asset—could help prices march even higher if a flurry of investors start piling into ETFs that mechanically buy Bitcoin in turn.
After a blowout 2023 that saw Bitcoin prices more than double, the flagship digital asset has gained almost 10% more since the start of 2024. Gains have been supercharged by limited token supply, with much of the Bitcoin in circulation held by long-term investors that have proved unwilling to sell. Historically low liquidity has exacerbated choppy trading across crypto, which could set Bitcoin up for big moves either way should ETF approval come. In the meantime, expect more volatility.
Corrections & Amplifications: An X account on Tuesday evening detailed the results of the company’s preliminary investigation into how the SEC’s X account was compromised. An earlier version of this article incorrectly said the X account posted on Wednesday evening.
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