Bitcoin price whipsaws as ETF excitement builds after SEC hack

Cryptocurrencies saw volatile trading on Wednesday as traders awaited a decision from the Securities and Exchange Commission on whether to authorize spot bitcoin exchange-traded funds. Digital assets have been buoyed for months by hopes of ETF approval after the agency's social media account was hacked on Tuesday and falsely posted that the fund had been approved.

Its price


Down 2% in the past 24 hours to $45,600, down from $46,900 it was trading at earlier – the SEC's X Account was released after 4pm ET on Tuesday as the first spot crypto ETFs approved. Bitcoin prices briefly rose above $48,000, their highest levels since early 2022, before falling after SEC Chairman Gary Gensler posted on social media that he does not approve listings or trades of funds. In a statement, the regulator said it had determined there was brief unauthorized access by an unknown party to its official X account, and it was working with law enforcement and government partners to investigate.

Adequate market surveillance mechanisms to protect against fraud and market manipulation in crypto are a major concern of the SEC, which has repeatedly delayed decisions on approving spot bitcoin ETFs over the past year. The agency now faces a Wednesday deadline for several proposed funds, which has brought anticipation across the crypto world to a boil this week. Frantic trading after dishonest SEC designation is evidence of froth.

“The pump-and-dump effect of crypto scams has come into sharp focus after the sharp swings in bitcoin. Fans are waiting for regulatory approval of spot bitcoin exchange-traded funds, and fraudsters have clearly used this option legally to defraud the system again,” said Susanna Streeter, an analyst at broker Hargreaves Launceston. “Yet, Bitcoin is at a two-year high as official approval is still expected for the first wave of ETFs.”

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Indeed, despite Tuesday's false start, analysts widely expect spot bitcoin ETF approval in the U.S. to be a matter of when. While some market participants engage in a “buy the rumor, sell the news” scenario, there is evidence that the approval of these funds will support crypto prices in the long run.

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A spot bitcoin ETF could spark renewed interest in the digital asset, particularly among institutional investors, some of whom have shunned crypto amid regulatory scrutiny for years but could pile on with the SEC's blessing. These funds, which hold the bitcoin tokens themselves—and not just the futures contracts that track the asset—could help prices move even higher if a wave of investors starts flocking to ETFs that mechanically buy bitcoin.

After seeing bitcoin price double in 2023, the premier digital asset has gained nearly 10% since the start of 2024. Long-term investors have proven unwilling to sell, boosted by a limited token supply with a large portion of bitcoin in circulation. Historically low liquidity has fueled bitter trading across crypto, which could set Bitcoin up for big moves even with ETF approval. Meanwhile, expect more volatility.

Write to Jack Denton at [email protected]

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