HODLers, Not ETFs, Responsible for Bitcoin Price Drops: Analyst Debunks Coinbase Rumour
In the ongoing debate over Bitcoin’s price drops, Bloomberg analyst Eric Balchunas has presented a solid counterargument to a widely circulated theory. Speculation had suggested that BlackRock, the world’s largest asset manager, was responsible for suppressing Bitcoin’s price through IOUs issued by Coinbase, a leading crypto exchange.
However, Balchunas argues that the real culprits behind Bitcoin’s declines are not institutional investors but rather native Bitcoin holders, or “HODLers,” who are selling off their holdings.
While some have blamed traditional finance (TradFi) players like BlackRock for these declines, Balchunas contends that it is, in fact, long-term Bitcoin investors causing the sell-offs.
Allegations Against Coinbase and BlackRock: Who Is Responsible For Bitcoin Price Drop?
Rumors suggesting that Coinbase is issuing Bitcoin IOUs for BlackRock have fueled concerns about potential market manipulation.
The speculation posits that through its ETF offerings, BlackRock could short Bitcoin by borrowing through Coinbase without holding an equivalent amount of real Bitcoin on a 1:1 basis.
Crypto analyst Tyler Durden popularized this theory and pointed to Coinbase’s transactions as evidence that the exchange is helping TradFi suppress Bitcoin prices.
Durden’s theory goes even further, alleging that Coinbase’s actions have directly impacted Bitcoin’s price at various market tops and bottoms.
His deleted tweet said this:
“I told everyone I went through the chain – I mean it’s a public ledger literally anyone can do it – Coinbase are writing IOUs for Blackrock. Now everyone is waking up and hopefully Coinbase has a bank run. Baldilocks is anti bitcoin.”
His argument is based on data showing that Coinbase is often the biggest buyer and seller at critical price points, which he claims is a sign of market manipulation.
Durden also suggested that BlackRock could eventually cause a market crash or significant pullback by capping Bitcoin’s price.
However, Coinbase CEO Brian Armstrong has publicly denied these allegations.
He explained that the process of minting and burning Bitcoin ETFs is entirely on-chain and undergoes frequent audits, ensuring that no foul play occurs.
Armstrong also clarified that while Coinbase serves institutional clients like BlackRock, it does so within regulatory frameworks and confidentiality agreements that prevent sharing specific details, including customer addresses.
Notably, critics, like Tron founder Justin Sun, have also voiced skepticism about Coinbase’s wrapped Bitcoin (cbBTC), which lacks proof of deposit. He called it a “ridiculous combination”.
The Big Role of Bitcoin HODLers: The Masked Sellers
While rumors about Coinbase and BlackRock’s role in Bitcoin’s price declines have persisted, Eric Balchunas has firmly rejected the idea that traditional financial institutions are behind these market shifts.
Balchunas argued that Bitcoin ETFs, particularly BlackRock’s, have actually stabilized the market, preventing the price from plunging even further.
Balchunas emphasized that many theories blaming BlackRock and other ETF issuers for Bitcoin’s decline stem from disbelief that core Bitcoin investors, or “HODLers,” could be responsible for selling off their holdings.
He pointed out that it is easier for market participants to scapegoat ETFs than to accept that long-term Bitcoin holders might be liquidating their assets.
According to Balchunas, these HODLers, not institutional players, are behind the recent price drops.
Supporting Balchunas’ argument, popular crypto analyst Ali Martinez revealed that Bitcoin miners sold over 30,000 BTC in just three days, which contributed to significant selling pressure.
This aligns with Balchunas’ claim that the “call is coming from inside the house,” meaning that the primary sellers are Bitcoin natives themselves rather than external financial entities.
Furthermore, Balchunas highlighted the positive impact of Bitcoin ETFs on the market. He noted that BlackRock’s Bitcoin ETF, launched earlier this year, helped drive the cryptocurrency to an all-time high (ATH) of $73,000 in March.
The ETF’s net inflows have continuously added liquidity to the market, which has supported Bitcoin’s price during volatile periods. In fact, since BlackRock’s ETF debut in January 2024, the fund has only recorded three days of net outflows.
Notably, Nate Geraci, the president of ETF Store Inc. and Co-founder of EFT Institute, shares the same stance with Balchunas.
He emphasized:
“Anyone perpetuating this stuff doesn’t understand how ETFs work.”
At the time of writing, Bitcoin’s price is hovering around $60,000, with analysts predicting that upcoming Federal Reserve rate cuts could provide a bullish boost.
Historically, such macroeconomic events have been positive for Bitcoin, and many market watchers expect the trend to continue in the weeks ahead.