The fake announcement of the approval of the Bitcoin exchange-traded fund (ETF) resulted in the liquidation of nearly $90 million worth of Bitcoin long and short positions in less than an hour yesterday (Thursday).

Opportunistic Traders Paid a Heavy Price

According to Coinglass data, opportunistic traders opened over 500 million in futures positions within ten minutes of the first tweet from the compromised X (formerly Twitter) account of the Securities and Exchange Commission (SEC). However, about $50 million in long positions and about $36 million in short positions were liquidated with the price swings, showcasing the possibility of market manipulation risks.

Following the first tweet from the compromised SEC account, Bitcoin jumped about 4 percent to $47,680 in a momentary spike. However, it went down immediately to as low as $45,400.

Liquidations on futures positions happen when traders take leverage long and short positions, and the market moves in the opposite direction. If those positions do not have enough margin, the exchanges usually liquidate the positions.

A Market Manipulative Mistake

The SEC’s Chief, Gary Gensler, quickly posted on X that the regulator's official X account was hacked, and the false announcement was taken down within 30 minutes. Now, many crypto big-shots are accusing the regulator of market manipulation.

As reported by Finance Magnates, the safety team at X confirmed that the SEC account “did not have two-factor authentication enabled at the time the account was compromised,” raising massive security lapses on the part of the regulator.

An SEC spokesperson confirmed that the regulator “will work with law enforcement and our partners across government to investigate the matter.”

The false announcement of the approval of Bitcoin ETF from the SEC’s compromised X account came only a day before the deadline for the decision on the Ark 21Shares Bitcoin Trust. Despite the security blunder, market commentators expect no delay in Wednesday's regulatory decision.

However, it is unclear if the US regulator will decide on only one Bitcoin ETF today or if it will approve or reject all applications.

An Imminent Approval?

The SEC has received more than a dozen applications for spot Bitcoin ETFs. Although some crypto-centric companies have been trying for approval for the instrument since as early as 2013, the entry of BlackRock in the space last year with a spot Bitcoin ETF application changed the picture.

Further, the market participants are bullish on the chances of the approval of Bitcoin ETF at this time. Two Bloomberg analysts are giving 90 percent odds in favor of the approval of Bitcoin ETF, while the latest rally in BTC price indicates optimism among investors.

Meanwhile, multiple Bitcoin ETF applicants have published advertisements to promote Bitcoin and their ‘yet to be approved’ Bitcoin ETF.

The Bitcoin ETFs will be listed on the US stock exchanges if approved. With available ETFs, market participants expect high demand for the crypto asset from retail and institutional investors as it will eliminate the requirement of setting up wallets and separate accounts with crypto exchanges.