Fake news goes beyond media speculation, it is now an effective tool in market manipulation.
Ethereum’s SEC fiasco was a quintessential example of the capability of the media to determine price action. News agencies and websites all over the world reported that on Tuesday the Securities and Exchange Commission (SEC) would come to a decision on whether or not Ethereum was a security.
Consequently, the price of Ethereum dropped 12.5% (from roughly $800 to $700) in anticipation of the ruling. If in fact Ethereum, and subsequently all ERC20 tokens, were considered securities by the SEC, then Ethereum and its spawn would have to comply with SEC regulations for any American investor to legally participate.
Understandably this ruling would have a considerable impact on Ethereum (the second largest cryptocurrency in the world) and overall market sentiment, as well as set an unnerving precedent for future cryptocurrency regulation.
These reports turned out to be almost entirely fraudulent as eager investors waited with no news of a ruling. Evidently all these reports were sensationalized from a post by the Wall Street Journal on May 1st which gave a passing mention of the matter saying, “A working group of regulators including senior SEC and CFTC officials are scheduled to discuss the matter on May 7”.
That one statement fueled an inferno of headlines predicting the impending doom of the world’s second largest cryptocurrency. All of which were completely mislead, because as of now neither the SEC nor the CFTC have made any statements regarding the matter.
The absolute power of the media is remarkable and will sway even the most confident of investors.
These events have further exposed the speculative paradigm of crypto market movements. Volatility coupled with speculative, and at times fraudulent, news coverage is a horrific combination which gives the entire market “Ponzi scheme” and “scam” labels.
Fake news is rampant in the crypto space, and we can only hope that media coverage matures alongside the growing market.