In a surprising turn of events, the SEC's misleading tweet regarding Bitcoin ETF approvals resulted in significant losses for traders, with over $220 million liquidated in the aftermath.
The misleading tweet initially sent the market soaring, only to witness a rapid downturn minutes later. This unexpected shift led to the second-largest wipeout event of the year, leaving thousands of traders in financial distress.
Amidst the chaos, more than 70,000 traders experienced the pain of liquidations, as Coinglass data revealed wild price swings in both directions. The total liquidated amount surpassed $220 million, marking a substantial setback for the affected traders.
Bitcoin took the most significant hit during the market turmoil, impacting long-position holders the worst. With long positions facing losses of $133.5 million compared to short positions at $87.29 million, the imbalance highlighted the vulnerability of certain market participants.
The fallout extended to major exchanges, with ByBit experiencing the largest single liquidation of a $6 million Bitcoin order. Binance and OKX followed closely, witnessing liquidations of $83.88 million and $73.97 million, respectively, contributing to the overall market carnage.
Nicky Gomez, Senior Partner at XReg Consulting, highlighted the potential influx of institutional and retail money into crypto following Bitcoin ETF approvals. Despite potential benefits, Gomez expressed concerns about the growing centralization of crypto, stating that it moves further from its original purpose and potential.
Gomez emphasized that while Bitcoin ETF approval might attract more speculative interest, it could distract from Bitcoin's original design as a peer-to-peer payment network outside the traditional financial system. He warned that this shift could deepen the divide among crypto purists, questioning the industry's evolving values.
This incident serves as a reminder of the inherent risks in the crypto market and the potential consequences of misleading information. As the crypto landscape evolves, striking a balance between innovation and preserving the core principles of decentralization remains a critical challenge.
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