The world of cryptocurrency was sent into a frenzy as Bitcoin (BTC) experienced a sudden and sharp 8% drop, plummeting below the $27,000 mark. The cause of this dramatic price plunge? Misinformation that circulated like wildfire regarding the approval of the iShares Bitcoin ETF. What seemed like a breakthrough moment for Bitcoin quickly turned into a rollercoaster of emotions for investors, as they grappled with the aftermath of this unexpected market upheaval.
In related news, traditional investors are increasingly finding their way into the cryptocurrency market, and two digital assets have consistently stood out as their preferred choices: BTC and Ripple (XRP). A recent report from CoinShares sheds light on the sustained appeal of these cryptocurrencies, marked by substantial inflows into exchange-traded products (ETPs) focused on them. Meanwhile, the report also reveals the hurdles that certain altcoins are currently facing, highlighting the evolving dynamics of the cryptocurrency landscape and the varied sentiments of investors in this rapidly changing market.
Bitcoin Drops 8% as Fake News Spreads Fears of ETF Approval
In a rollercoaster ride that sent shockwaves through the cryptocurrency market, Bitcoin (BTC) experienced an abrupt drop of 8%, plunging below $27,000, after misinformation about the approval of the iShares Bitcoin ETF circulated.
The sudden price plunge occurred after a headline on Reuters, sourced from Benzinga, erroneously claimed that the Securities and Exchange Commission (SEC) had granted approval to the ETF application by BlackRock, one of the world's largest asset management firms. Many investors and traders took the news at face value, causing Bitcoin's price to briefly touch above $30,000 on some exchanges in anticipation of institutional investment pouring into the cryptocurrency market.
However, the excitement was short-lived as BlackRock promptly issued a statement contradicting the reports. Fox Business reporter Eleanor Terrett clarified that BlackRock denied the approval claims, asserting that their application remained under review. Forbes and other reputable news outlets subsequently confirmed that BlackRock's spot Bitcoin ETF application was still pending, dispelling the initial enthusiasm.
CoinTelegraph, which was among the first to report the news, faced backlash for not verifying their sources thoroughly. They later amended their post by adding the word "reportedly" to their claim, a move that was met with criticism and humorous remarks from industry observers. James Seyffart, a prominent ETF analyst, quipped, "They edited the tweet to add 'reportedly' hahaha. Guys...you reportedly reported the report!"
In response to the growing controversy, CoinTelegraph issued an apology for disseminating fake news. Their mea culpa tweet on the false BlackRock Bitcoin ETF report was met with an overwhelming wave of comments and reactions on social media platforms, highlighting the cryptocurrency community's vigilance and scrutiny.
The cryptocurrency market, known for its volatility, saw a swift correction once the false news was debunked. Despite the setback, experts remain optimistic about the future of Bitcoin and the potential for a spot Bitcoin ETF approval. Bloomberg analysts have assigned a 90% likelihood of a spot Bitcoin ETF gaining SEC approval by 10 January 2024. Recent developments from industry players like ARK and 21Shares indicate constructive engagements with the U.S. Securities and Exchange Commission (SEC), suggesting that approval may be on the horizon.
The cryptocurrency market continues to be a dynamic and rapidly evolving space, where misinformation can have profound effects on prices. Investors and traders are urged to exercise caution and rely on verified information from reputable sources to make informed decisions.
Bitcoin and XRP Attract Traditional Investors, While Altcoins Face Challenges
Meanwhile, in a recent report by CoinShares, BTC and XRP have emerged as consistent favorites among traditional investors, as reflected by substantial inflows into exchange-traded products (ETPs) linked to these popular cryptocurrencies over the past week.
Bitcoin-focused ETPs witnessed a surge in investor interest, with a notable $16 million flowing into these products, pushing year-to-date inflows to an impressive $260 million. This resurgence in interest in Bitcoin can be attributed to several factors. Firstly, Bitcoin has been heralded as a digital store of value and a hedge against inflation, making it an attractive option for institutional and retail investors alike in times of economic uncertainty.
Moreover, the recent rise of Bitcoin ETFs in various markets has made it more accessible to a wider range of investors who may have previously been hesitant to enter the cryptocurrency space. These ETFs offer a regulated and convenient way to gain exposure to Bitcoin's price movements, further fueling the cryptocurrency's appeal.
However, it is worth noting that not all investors are bullish on Bitcoin. Short Bitcoin investment products also experienced inflows of $1.7 million, indicating the presence of bearish sentiment in the market. This demonstrates the diverse opinions and trading strategies within the cryptocurrency space, with some investors hedging against Bitcoin's potential downside.
On the other hand, XRP-oriented investment products demonstrated remarkable resilience, with $0.42 million of inflows recorded last week. This marks the 25th consecutive week of positive fund flows into XRP products. This consistent investor support is particularly noteworthy considering the legal challenges XRP has faced throughout the year.
The ongoing legal battle between Ripple Labs, the company behind XRP, and the U.S. Securities and Exchange Commission (SEC) has cast a shadow of uncertainty over XRP's regulatory status. Nevertheless, XRP has continued to garner investor interest, highlighting the cryptocurrency's strong community and belief in its long-term potential.
Despite the successes of Bitcoin and XRP, the CoinShares report also shed light on the challenges faced by certain altcoins. Litecoin (LTC) and Chainlink (LINK) ETPs experienced outflows totaling $0.28 million and $0.31 million respectively, indicating a difficult period for these digital assets. Altcoins often face increased volatility and a more challenging competitive landscape than Bitcoin, which can result in varying investor sentiment.
Ethereum, the leading altcoin in the cryptocurrency market, also faced investor reluctance, with outflows totaling $7.5 million last week. These outflows, which partially offset significant inflows from the previous week, can be attributed to concerns about the design of the Ethereum protocol. Investors may be wary of Ethereum's transition to a proof-of-stake (PoS) consensus mechanism and the potential impact on its scalability and energy efficiency.
Price Overview
The effect of the fake news surrounding BlackRock’s ETF approval was still evident within the cryptocurrency market. At press time, the cryptocurrency price tracking website, CoinStats, indicated that the global cryptocurrency market cap was up 2.28%. Subsequently, the market’s valuation was estimated to be around $1.12 trillion.
The market leader, BTC, was still able to print a notable 24-hour gain despite the strong correction it underwent yesterday shortly after the approval news was cleared and confirmed to be false. Data from CoinStats indicated that BTC was changing hands at $28,194.28. This was after it achieved a 3.59% gain over the past day of trading. This positive daily performance was also enough to flip the cryptocurrency’s weekly performance back into the green zone. At press time, BTC’s price was up just over 2% for the past week.
Price chart for BTC (Source: CoinStats)
Not only was BTC’s short-term performances in the green, as data from CoinStats showed that the longer time frames were also looking good for the leading cryptocurrency. BTC was up around 6% for the month, wile its yearly performance stood at around +46%.
