Coinbase is accused by BlackRock of lowering Bitcoin's price, while analysts say long-term holders are selling.
Bloomberg analyst Eric Balchunas has refuted a popular explanation about Bitcoin's price declines. BlackRock, the world's biggest asset manager, was suspected of lowering Bitcoin's price using Coinbase IOUs.
Balchunas claims that “HODLers,” or Bitcoin holders, are dumping their holdings, not institutional investors, which are causing Bitcoin's falls.
Balchunas blames long-term Bitcoin investors for these sell-offs, not TradFi players like BlackRock.
Rumors that Coinbase is producing Bitcoin IOUs for BlackRock raise market manipulation worries.
One theory is that BlackRock's ETFs might short Bitcoin by borrowing from Coinbase without owning actual Bitcoin.
Crypto analyst Tyler Durden popularized this argument and used Coinbase's transactions to prove TradFi is suppressing Bitcoin prices.
Durden even claims that Coinbase's activities have directly affected Bitcoin's price during market peaks and bottoms.
This was his deleted tweet:
I informed everyone I walked through the chain—it's a public ledger, anybody can do it—and Coinbase is issuing Blackrock IOUs. Everyone is waking up, so maybe Coinbase has a bank run. Baldilocks opposes bitcoin.”
Based on statistics, he argues market manipulation occurs when Coinbase is the largest buyer and seller at important price points.
Durden also warned that BlackRock's Bitcoin price limit might create a market meltdown or substantial downturn.
Coinbase CEO Brian Armstrong denies these claims.
He said that minting and destroying Bitcoin ETFs is on-chain and audited often to prevent fraud.
Armstrong said that Coinbase serves institutional customers like BlackRock under regulatory and confidentially agreements that preclude it from revealing customer addresses.
Coinbase's wrapped Bitcoin (cbBTC) lacks proof of deposit, and Tron inventor Justin Sun has also criticized it. He dubbed it “ridiculous combination”.
Coinbase and BlackRock have been blamed for Bitcoin's price drops, although Eric Balchunas denies it.
Balchunas said that Bitcoin ETFs, notably BlackRock's, had steadied the market, preventing additional price drops.
Balchunas said that many arguments blaming BlackRock and other ETF issuers for Bitcoin's collapse arise from doubt that core Bitcoin investors, or “HODLers,” sold their holdings.
He said that market players prefer to blame ETFs than realize that long-term Bitcoin investors may be selling.
Balchunas said HODLers, not institutional players, are causing price decreases.
Popular crypto researcher Ali Martinez said Bitcoin miners sold approximately 30,000 BTC in three days, adding to selling pressure.
This supports Balchunas' notion that the “call is coming from inside the house,” suggesting Bitcoin locals are the main dealers.
Balchunas also noted Bitcoin ETFs' market benefits. He added that BlackRock's Bitcoin ETF, created earlier this year, helped push the cryptocurrency above $73,000 in March.
ETF net inflows have consistently increased market liquidity, supporting Bitcoin's price during tumultuous times. After its January 2024 ETF launch, BlackRock has only had three days of net outflows.
Nate Geraci, president of ETF Store Inc. and co-founder of EFT Institute, agrees with Balchunas.
