The recent sentencing of a 26-year-old individual to 14 months in prison for hacking the U.S. Securities and Exchange Commission’s (SEC) X account has brought renewed attention to the chaotic events surrounding the Bitcoin ETF approval in January 2024. This incident, which occurred just one day before the historic approval of spot Bitcoin ETFs on January 10, 2024, sent shockwaves through both crypto and stock markets. According to a report by Bloomberg, the hacker posted a fake announcement claiming that the SEC had approved Bitcoin ETFs, triggering a massive spike in Bitcoin’s price. On January 9, 2024, at approximately 4:11 PM EST, Bitcoin (BTC) surged from $46,730 to a high of $47,680 within minutes on the BTC/USD pair on Binance, only to crash back to $45,900 by 4:30 PM EST once the SEC clarified the account was compromised. Trading volume on Binance spiked by over 300% during this 20-minute window, with nearly $3.2 billion in BTC traded. This event not only rattled crypto traders but also had a ripple effect on stock markets, particularly on crypto-related stocks and ETFs awaiting approval. The incident underscored the fragility of market sentiment and the interconnectedness of traditional finance and cryptocurrency ecosystems during high-stakes regulatory moments. As the crypto market continues to mature, such events highlight the need for robust security measures and the potential for significant volatility driven by misinformation.

From a trading perspective, the SEC hack and subsequent ETF approval created unique opportunities and risks across markets. The initial price pump on January 9, 2024, saw heavy buying activity on BTC/USD and BTC/ETH pairs, with Ethereum (ETH) also gaining 2.3% to reach $2,350 by 4:20 PM EST on Coinbase, reflecting correlated bullish sentiment. However, the rapid reversal post-clarification led to over $200 million in liquidations across major exchanges, as reported by CoinGlass data for that day. This event directly impacted crypto-related stocks, with companies like Coinbase Global Inc. (COIN) seeing a 3.5% intraday spike to $134.50 on January 9, 2024, at 4:15 PM EST on NASDAQ, before dropping to $130.20 by market close. The eventual ETF approval on January 10, 2024, drove institutional inflows, with Grayscale Bitcoin Trust (GBTC) recording $95 million in trading volume on its first day post-conversion to an ETF, according to Yahoo Finance. This institutional money flow signaled growing confidence, yet the hack incident reminded traders of the risks of sudden sentiment shifts. For crypto traders, such events emphasize the importance of monitoring news catalysts and preparing for volatility spikes, while stock traders could capitalize on correlated movements in crypto-adjacent equities during regulatory developments.

Analyzing technical indicators and volume data, the January 9, 2024, fake news event pushed Bitcoin’s Relative Strength Index (RSI) on the 1-hour chart to an overbought level of 78 at 4:20 PM EST on TradingView, before dropping to 42 by 5:00 PM EST, indicating a sharp reversal. On-chain metrics from Glassnode showed a spike in Bitcoin transactions, with over 15,000 transactions per hour during the 4:00-5:00 PM EST window, compared to a daily average of 10,000, reflecting panic buying and selling. Meanwhile, stock market correlations were evident as the S&P 500 Futures gained 0.2% to 4,785 points by 4:30 PM EST on January 9, 2024, per CME Group data, hinting at broader risk-on sentiment briefly fueled by the crypto rally. Post-ETF approval on January 10, 2024, Bitcoin stabilized around $46,500 by 10:00 AM EST, with daily trading volume on Binance reaching $25 billion, a 40% increase from the prior week. For institutional investors, the hack incident and ETF approval highlighted a dual dynamic: while crypto markets remain prone to sharp volatility, the integration with traditional finance via ETFs could attract steadier capital flows. Crypto traders should watch key support levels around $45,000 on BTC/USD, while stock traders might monitor COIN and GBTC for breakout opportunities tied to crypto sentiment.

The correlation between stock and crypto markets during this period was stark, as institutional interest in Bitcoin ETFs bridged the two ecosystems. According to a report by Reuters, asset managers like BlackRock saw significant inflows into their iShares Bitcoin Trust (IBIT) post-approval, with $1 billion in volume by January 12, 2024, at 3:00 PM EST. This institutional money flow not only boosted Bitcoin’s price to $48,000 by January 13, 2024, at 9:00 AM EST on Binance but also lifted crypto stocks, with MicroStrategy (MSTR) gaining 5.2% to $510.30 on January 12, 2024, at 2:00 PM EST on NASDAQ. Such movements suggest that stock market events, particularly those involving regulatory clarity for crypto, can create cascading effects on digital asset prices. Traders should remain vigilant for cross-market signals, as increased institutional participation could further tighten these correlations, amplifying both opportunities and risks in volatile periods like the SEC hack and ETF approval saga.