Why Dogecoin Was Sinking Today
On a particularly memorable day for cryptocurrencies, Dogecoin (CRYPTO: DOGE) was falling more than 4% Tuesday afternoon. The overall crypto market was affected by a hot piece of news that turned out to be fake, while Dogecoin itself was jostled by another falsehood.
Crypto spot ETFs not approved after all
The big piece of fakery was a post that afternoon on the X (formerly Twitter) account of the Securities and Exchange Commission (SEC) regarding Bitcoin (CRYPTO: BTC) spot exchange-traded funds (ETFs).
The post stated that "Today the SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges. The approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection."
When and if approved, spot crypto ETFs will make it much easier for investors to put money in such assets, since direct investment in coins and tokens can be complicated and clunky. So their approval by the SEC will likely provide a serious boost to their values.
Alas, it wasn't to be. Shortly after the post was published, SEC chairman Gary Gensler posted on his personal X account that the SEC's page was "compromised." He added that the regulator has not approved any Bitcoin ETFs.
A shaggy dog story
On an apparent banner day for X hacking and fake-posting, an anonymous user of the site with the handle TraderAguila published a screenshot of a chat on the messaging app Telegram about Dogecoin's mascot. According to the conversation, the mascot, a Shiba Inu named Kabuso, had passed away. Since even the most minor occurrences can affect the volatile coin, its value raced as much as 9% higher on the news.
Like Gensler, TraderAguila retracted the post shortly after it went live, stating that he or she had discovered the screenshot was faked. As the correction circulated around the cryptosphere, investors sold out of Dogecoin.
Both incidents go to show that among financial assets, cryptocurrencies remain some of the most volatile investments on the market. Investors should always take extra care when disseminating "news" about them and frequently take developments with an initial grain of salt.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
