- Rumours have surfaced over the weekend that Coinbase has been colluding with BlackRock to stifle Bitcoin’s price growth since ETFs launched in January this year.
- According to some on social media, Coinbase is providing BlackRock with Bitcoin IOUs (essentially “paper” Bitcoin), which the institution is then using to manipulate Bitcoin’s price.
- This conspiracy was quickly shot down by Coinbase CEO Brian Armstrong, as well as other high-profile members of the crypto community.
It wouldn’t be a weekend in the crypto markets without some form of controversy, and that’s exactly what Coinbase has delivered.
Several analysts took to social media to announce some interesting market data that demonstrated Coinbase was the biggest Bitcoin buyer at both its high and low points. This led the primary accuser – a Twitter user with the handle TylerDurden – to suggest that Coinbase was issuing Bitcoin IOUs to BlackRock in a form of market manipulation.
So what does this actually mean, and is there any truth to it?
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Coinbase Selling “Paper” Bitcoin to BlackRock, According to Rumours
The implication made by Tyler Durden and others on social media is that Coinbase is allowing BlackRock to borrow Bitcoin without providing collateral. Theoretically, this could mean that BlackRock then shorts BTC, and given its immense holdings (357k+ BTC), ultimately manipulate the price up and down.
This concept, Tyler Durden argues, is supported by Coinbase being the primary buyers/sellers at market highs and bottoms over the past few months.
In simple terms, the conspiracy suggests that BlackRock and Coinbase are profiting off the Bitcoin market by routinely controlling the coin’s rises and falls within the US $55-70k range.
The claim has been refuted by both Coinbase CEO Brian Armstrong, as well as several other high-profile analysts on social media.
Armstrong stated that the discrepancies uncovered by Tyler Durden were normal, as “institutional clients have trade financing and OTC options before trades are settled onchain…This is the norm for all our institutional clients…funds are settled…(onchain) within about 1 business day.”
Others leaped to Armstrong and Coinbase’s defence.
Notably, Bloomberg analyst and ETF expert Eric Balchunas argued that the claims may be a form of justification for Bitcoin’s mediocre performance over the past few months. He suggested it’s easier for market participants to blame the “big, bad businesses” rather than accept the coin is simply in a bit of a lull.
It does seem unlikely that two of the blockchain’s biggest advocates and adopters (Coinbase and BlackRock) are conspiring against the industry.
But hey – stranger things have happened.
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