Fake Bitcoin ETF Approval Tweet Causes $90M in Liquidations
Price volatility following a series of fake tweets from the U.S. Securities and Exchange Commission (SEC)’s X account caused nearly $90 million worth of bitcoin (BTC) long and short positions to be liquidated, showcasing manipulation risks associated with the industry.
Hackers Post Fake Tweets from SEC Account
Hackers caught hold of SEC’s X account on Tuesday, using it to post a nod for the much-awaited bitcoin exchange-traded fund (ETF) approval decision. It later posted “$BTC,” before both tweets were promptly deleted.
Those tweets caused bitcoin prices to immediately spike to $47,680 from the $46,800 level. It then fell as low as $45,400 as the tweets were found to be fake.
Impact on Positions and Market Reaction
Punters and automated bots, however, reacted quickly to the tweets. Over $500 million in futures positions were opened in a ten-minute period following the initial post, data shows. But the highly-levered positions took a hit as prices whipsawed: Some $50 million in longs were liquidated while $36 million in shorts were impacted.
Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader's initial margin. It happens when a trader is unable to meet the margin requirements for a leveraged position (fails to have sufficient funds to keep the trade open).
Such data is beneficial for traders as it serves as a signal of leverage being effectively washed out from popular futures products – acting as a short-term indication of a decline in price volatility.
Criticism Towards SEC's Security Measures
Meanwhile, some crypto market participants criticized the SEC’s seemingly lax security measures to protect its account – even asking how the financial regulator could safeguard trillion-dollar markets if it couldn’t protect its social accounts.
