On Wednesday, the U.S. Securities and Exchange Commission (SEC) granted approval for multiple exchange-traded funds (ETFs) directly investing in bitcoin. However, the 24 hours preceding this decision were marked by significant turmoil.
As per a filing on the SEC’s website, the SEC authorized the launch of 11 bitcoin ETFs, set to commence trading on Thursday.
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The situation took a chaotic turn on Tuesday when the SEC’s official X account on Twitter posted what it later described as an “unauthorized” message, falsely claiming approval for spot bitcoin ETFs. SEC Chair Gary Gensler clarified on the same platform that no such ETFs had been approved, attributing the misinformation to a compromised account. The SEC promptly removed the unauthorized post, acknowledging unauthorized access and promising collaboration with law enforcement for an investigation.
Following the misleading tweet, Bitcoin experienced a brief 2% surge before retracting. On Wednesday, just before the U.S. stock market closure, the SEC officially posted the approval order for bitcoin ETFs on its website. However, the initial link encountered technical issues, leading to an “error 404” page. The SEC later reposted the same filing without explaining the broken link.
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Greg Magadini, Director of Derivatives at Amberdata, noted that these recent events have been somewhat embarrassing for the SEC, given its emphasis on the high risks and susceptibility to market manipulation associated with cryptocurrencies. Despite this, Magadini believes investor interest in bitcoin ETFs will not wane.
Bitcoin exhibited lower volatility on Tuesday and Wednesday than anticipated by options traders, rising approximately 0.4% to around $46,400 on Wednesday evening, according to CoinDesk data. Investors have factored in initial flows of $1 to $2 billion into the newly approved bitcoin ETFs.
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Steven Lubka, Head of Private Clients and Family Offices at Swan Bitcoin echoed Magadini’s sentiment, suggesting that the hurdles encountered on the path to SEC approval are unlikely to dampen investor enthusiasm for these funds. Lubka emphasized that the SEC’s role is not in launching ETFs and highlighted the considerable attention these products have garnered.
