Fake News wakes the market

SEC Bitcoin ETF warning

False news impact on Bitcoin price

BlackRock CEO on cryptocurrency demand

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Oct 20, 2023

The U.S. Securities and Exchange Commission (SEC) issued a warning on October 19, 2023, after false rumors circulated online that the agency had approved a spot Bitcoin exchange-traded fund (ETF) . The SEC clarified that it had not approved any such product and urged investors to exercise caution when dealing with unverified information . The SEC also reminded the public that it does not endorse or sponsor any particular securities, issuers, products, services, or trading platforms .

The false rumors originated from a tweet by crypto news company Cointelegraph incorrectly claiming to have insider information about the SEC’s approval of a spot Bitcoin ETF by Valkyrie Digital Assets . The tweet was quickly deleted, but not before it was widely shared and reported by some media outlets . The fake news caused a brief spike in the price of Bitcoin to hit $30,000 on some exchanges. While the news ultimately proved to be false, resulting in Bitcoin retracing to support above $28,400, the sudden price surge brought on by the announcement and the resulting enthusiasm it sparked across the crypto ecosystem provided a glimpse of what could happen once a spot Bitcoin ETF is eventually approved.  Later, Cointelegraph issued an apology for the mistake on their website, and on X.

A spot Bitcoin ETF would allow investors to buy and sell Bitcoin directly through a regulated exchange, without the need for futures contracts or other derivatives . However, the SEC has so far only approved Bitcoin futures ETFs, which track the price of Bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME).  The SEC has not indicated when or if it will approve a spot Bitcoin ETF, but some analysts believe that the success of the Bitcoin futures ETFs could pave the way for a spot Bitcoin ETF in the future . However, the SEC has also expressed concerns about the potential risks and challenges of regulating a spot Bitcoin ETF, such as market manipulation, fraud, custody, and liquidity issues . Therefore, investors should be wary of any claims or rumors about the SEC’s approval of a spot Bitcoin ETF until they are officially confirmed by the agency.

Following these events, Bitcoin supporters came out of the woodwork to discuss the potential future of the asset class.  One important figure to jump on the opportunity to discuss the news was BlackRock CEO, Larry Fink.  Fink took to FoxBusiness in a live broadcast to talk about the news, and Bitcoin overall.  In the segment, Fink, who said he was busy throughout the day and heard the fake news only an hour before the interview, said “this is an example of the pent-up interest in cryptocurrencies.”  

Fink stated that although the news turned out to be fake, this is a signal that there is “significant underlying demand for cryptocurrency.” 

Fink went on to describe why investors are so interested in cryptocurrency, “Some of this rally is way beyond the rumor, I think the rally today is about a flight to quality with all the…issues around the Israeli war now [and] global terrorism,” 

Fink also observed a broader trend of investors seeking safer assets in uncertain times.  “There’s more people running into a flight to quality whether that is Treasury's, gold or crypto, depending on how you think about it,” he said “I believe crypto will play that type of role as a flight to quality.”

So why is any of what Fink said important?  During the interview, Larry Fink is continuing to explain to the market and investors that his company, Blackrock, the largest asset manager in the world, has clients around the world that want to invest in cryptocurrencies.  Specifically, we know that Blackrock is interested in Bitcoin as an investment option due to their Bitcoin ETF filing.  But I think it is interesting that Fink is beginning to pivot from not only discussing the importance, benefit, and financial opportunities provided by Bitcoin, but he is leaving the door open for other cryptocurrencies as well.  I also think it's very positive that Fink is commenting on Bitcoin, and classifying it as a flight to quality when compared to other assets.  This is a huge statement from such a large asset manager.  Fink compared Bitcoin to Treasuries and Gold when discussing the topic of flight to quality or flight to safety.  This type of positive sentiment will continue to make its rounds in the traditional asset management world, and continue to positively influence individuals to invest in the upcoming Bitcoin ETF, and ultimately, increase the price of Bitcoin.  A link is provided below to see a segment of the live interview with Fink. 

Final point.  With this event providing a very brief preview of what could happen with a Bitcoin spot ETF approval, this should be a glimpse of what is to come.  As a reminder, retail investors (us) have around 83 days (at the time of this article 10/20/23) or less to purchase their fair share of Bitcoin prior to the actual BTC spot ETF approval before the price potentially increases significantly.  The final date for the SEC to respond to the initial BTC spot ETF filing from Cathy Wood’s ARK 21 Shares is January 10, 2024.  Once the broader institutional investors (asset managers/customers/companies) enter the market and allow the rest of its customers to purchase and hold Bitcoin safely within a financial institution, the price of Bitcoin is surely set to soar.  This is also right in line with the halving cycle where the price of Bitcoin would be on its journey to reach all-time high’s.  This might even be the last opportunity for retail investors to obtain Bitcoin under $30,000 ever.  So, although it was unfortunate that the market reacted to false news/rumors, it could be the wakeup call we all needed.  Are you paying attention? 

Obviously not financial advice, but definitely something to consider!  Do your research and act accordingly.