Bloomberg Analyst: Bitcoin Weakness Caused by Long-Term Holders, Not BlackRock

Amid recent controversy in the cryptocurrency community regarding BlackRock’s alleged influence on Bitcoin prices through Coinbase’s cbBTC, Bloomberg’s senior ETF analyst, Eric Balchunas, has refuted these claims. According to Balchunas, the primary cause of Bitcoin’s recent price weakness is not related to BlackRock or the opacity of its Bitcoin spot ETF, but rather the selling activities of long-term Bitcoin holders, commonly referred to as “HODLers.”

Key Points from Eric Balchunas

1. Long-Term Holders Selling:

  • In response to allegations that BlackRock’s Bitcoin ETF is putting downward pressure on Bitcoin prices, Balchunas argued that many in the community are overlooking a more plausible explanation. “It’s inconceivable to them that native HODLers can become sellers. But this is actually happening,” Balchunas stated on X (formerly Twitter). He emphasized that long-term holders have been selling Bitcoin, which is driving price weakness.

2. ETF and BlackRock’s Role:

  • Balchunas dismissed the notion that BlackRock and its Bitcoin ETF are to blame for the price decline. He stated that ETFs, including BlackRock’s, have actually helped stabilize Bitcoin’s price during downturns by pulling it back from lower levels, counteracting some of the market’s volatility.

Rebuttal from Nate Geraci

1. Conspiracy Theories About ETFs:

  • Nate Geraci, CEO of ETF Store, also weighed in on the debate, addressing the conspiracy theories surrounding Coinbase’s alleged involvement with BlackRock’s Bitcoin ETF. He pointed out that Coinbase holds Bitcoin on a 1:1 basis for the physical ETF, ensuring that the underlying asset is properly backed. Geraci likened the situation to similar claims made when gold physical ETFs were launched, stating, “People who repeat such claims do not understand how ETFs work.”

2. Clarifying the ETF Mechanism:

  • Both Balchunas and Geraci emphasized that the operations of ETFs are transparent and subject to regulatory scrutiny, refuting the idea that BlackRock could be using its ETF to manipulate Bitcoin prices. They argued that the decline in Bitcoin’s price is not due to ETF-related practices, but rather market dynamics, including the actions of long-term Bitcoin holders.

The Broader Debate

1. BlackRock and Bitcoin Market Sentiment:

  • BlackRock’s entry into the Bitcoin space has generated both excitement and skepticism. While some believe that the presence of major institutional players like BlackRock will ultimately stabilize Bitcoin and boost its legitimacy, others are wary of the potential for market manipulation.

2. Role of Long-Term Holders:

  • The recent sale of Bitcoin by long-term holders has caught many off guard. Traditionally viewed as steadfast, long-term holders exiting their positions can indicate a shift in sentiment and contribute to market volatility, particularly if these sales happen in large volumes.

Conclusion

Eric Balchunas’s analysis suggests that Bitcoin’s recent price weakness is more attributable to the selling activities of long-term holders than to any actions by BlackRock or its ETF. Alongside Nate Geraci’s clarification on how Bitcoin ETFs operate, the discussion highlights the importance of understanding market dynamics before attributing blame to institutional players. As the debate continues, the focus remains on how long-term holders and institutional involvement will shape Bitcoin’s price trajectory.

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