SEC WARNS OF CRYPTO ‘FOMO’ AMID BITCOIN ETF HOPES 

The U.S. Securities and Exchange Commission (SEC) has reiterated its caution against the FOMO (Fear of Missing Out) mentality in cryptocurrency investment, especially as the market buzzes with anticipation for the approval of spot Bitcoin exchange-traded funds (ETFs).

This reissued warning was shared on X (formerly Twitter) by the SEC’s Office of Investor Education on January 6. It emphasizes the risks linked to digital assets, including meme stocks, cryptocurrencies, and non-fungible tokens (NFTs). The SEC had initially issued similar advice on January 23, 2021, during the peak of a bull market in crypto and equities, and again in March 2022 as the market began to cool.

Social media speculation hints that this renewed warning may signal the imminent approval of spot Bitcoin ETFs, which have a decision deadline of January 10. The SEC’s message also highlighted the involvement of celebrities and athletes in promoting crypto assets, cautioning investors against basing investment decisions solely on such endorsements.

The SEC’s track record includes penalizing celebrities for their roles in promoting cryptocurrencies without proper disclosures. For instance, on October 3, 2023, Kim Kardashian agreed to pay a $1.26 million settlement to the SEC for not disclosing a payment of $250,000 for promoting a dubious token, Ethereum Max (EMAX), on Instagram.

Furthermore, the SEC’s report pointed out the potential volatility of trend- and influencer-driven assets, which can initially seem alluring but often lead to substantial losses as market interest shifts. The report poses a reflective question about the consequences of significant one-day investment losses.

This latest SEC advisory comes at a time when the crypto industry is keenly observing the Bitcoin ETF space, with expectations that most applications meeting the SEC’s requirements by December 29 will likely receive approval within the week, as predicted by Bloomberg’s senior ETF analyst Eric Balchunas.

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