Bitcoin's market capitalization nosedived by nearly $50 million, and its price volatility on Tuesday afternoon triggered nearly $90 million in liquidations following a fake spot Bitcoin exchange-traded fund (ETF) approval tweet by the U.S. Securities and Exchange Commission (SEC).
Bitcoin's market capitalization was $938.43 billion at around 5 p.m. ET on Tuesday but plummeted to $890.16 billion just a few hours after the fake tweet surfaced online, following the SEC's announcement that its official X (formerly Twitter) account was compromised.
The fake SEC tweet also triggered the price of the world's oldest crypto asset to surge from the $46,000 price point to as high as $47,893 but eventually plunged to $45,430 after the agency revealed that its social media account was compromised.
Bitcoin's price volatility propelled the liquidation of more than $90 million of leveraged BTC positions, based on data from the cryptocurrency futures trading and information platform CoinGlass.
Total liquidations for all leveraged crypto positions amounted to around $230 million.
Data reveals that the majority of the liquidations were the result of long positions, with $140 million in value wiped out. In contrast, $91 million in value was liquidated in short positions.
These figures underscore the inherent risks associated with trading in cryptocurrencies and the importance of carefully managing one's leveraged positions in the market.
The positive sentiment surrounding the approval of a Bitcoin ETF remained steadfast despite the drama concerning the SEC on Tuesday.
The optimism of industry watchers and business executives surrounding the potential launch of the crypto investment vehicle in the U.S. and Bitcoin has not diminished.
"Usually, after positive news, there follows a price increase caused by FOMO or greed, which over-speculates the price of markets for that asset. We saw the price go over $47,000 with the fake Tweet of the approval. However, once the ETF gets officially approved by the SEC, we will likely see Bitcoin's price go up, and later, the market will mature both in the short-term and long-term. In the long term, much capital comes from a different market, not just crypto, and BTC's constant price appreciation action," Gaurav Dubey, CEO of crypto incubator and lifetime advisory firm TDeFi told International Business Times.
Felix Xu, CEO and co-founder of the decentralized secure computation network ARPA Network, is optimistic that Bitcoin will not only reach new highs in terms of price but will also be used for hedge and pension fund allocations following the SEC's approval of the BTC ETF.
"Bitcoin, finally, can hit six figures. Last time, we couldn't manage to do it, but this time, with the ETF approval, hedge funds and pension funds will be allocated to BTC. After Tesla and MicroStrategy, we could see another big corporation putting BTC on their balance sheet, and potentially, another country would make a similar move, like El Salvador, and declare Bitcoin a legal tender as the flipping gold narrative gains traction," Xu told IBT in an email.
Hatu Sheikh, CMO, and co-founder of the innovative platform that operates within the realm of cryptocurrency and blockchain DAO Maker said: "With speculations rife around the US Spot Bitcoin ETF getting approval soon, Bitcoin prices will likely go up, just as we saw with the fake BTC ETF approval Tweet; the price spiked to above $47,000. The excitement will grow further if the SEC approves multiple Bitcoin ETF applications. However, this robust recovery will be followed by a market cooldown."
He further said, "For now, the Bitcoin price is on an ascending curve that looks to become steeper. Over the past year, Bitcoin has grown steadily, with its market capitalization more than doubling from nearly US$800 million to nearly US$1.7 trillion. The growth rate will be higher, posting a much larger number until it reaches a cooldown phase and stabilizes."
Bitcoin was trading in the red zone at $46,510.95 with a 24-hour trading volume up by 23.26% at $43,548,366,815 as of 1:31 p.m. ET on Wednesday.
Bitcoin's latest price action represents a 0.62% increase in its value in the past 24 hours and an 8.76% gain in the last seven days.
Data from CoinMarketCap shows that Bitcoin's current circulating supply stands at 19,594,831 BTC and its market cap is at $908,489,381,675.
