The Rumor you Shouldn't buy.
Rumors have circulated that Coinbase is issuing Bitcoin IOUs to BlackRock, which purportedly allows the financial firm to manipulate the market by borrowing Bitcoin without maintaining a 1:1 reserve.
The fear of institutions printing paper Bitcoin has been an issue since the birth of the entire industry. This is why we self-custody. The entire point of crypto is to stop trusting these centralized entities. These fears will continue to surface until the genpop learns to stop being so reliant and trusting of the banks they do business with. However, these current rumors have absolutely zero substance to them.
Analyst Tyler Durden, among others, has publicly accused Coinbase of supporting these operations, implying that BlackRock may utilize these borrowed Bitcoin tokens to short the market, causing volatility.
Oh no a right-wing incel on Twitter said it so it must be true, lol.
I hate to break it to everyone but if your avatar is Brad Pitt during one of his most pinnacle roles you might have a case of short-man complex. Or small-dick-big-truck; they're all the same. This is a delusional self-image, guaranteed.
So what evidence is there that Coinbase is fucking around and going to find out?
Oh, well, the evidence is... there is no evidence. This is global thinking at its worst. Number hasn't been going up and we've been in a crab market for 6-months, therefore someone at the top must be suppressing the price somehow. Right? Right!
As much as I love a good conspiracy theory there has to be at least something to back it up, and we've got absolutely nothing here but frustrated investors wondering why they can't buy a Lambo in the third year of an obvious four year cycle. Talk to me in 2025 when shit gets real.
My personal analysis
If the only evidence we are going to go by is what the price is doing... then absolutely nothing looks out of the ordinary here. We got a blow-off-top early at record breaking speeds before the halving event, and we've been mostly crabbing within a 20% window from the top. All of this has screamed typical Bitcoin. It isn't glamorous and it's not supposed to be. Grow up. The golden-crosses are coming back in Q4 just like they always do.
Of course Coinbase has vehemently denied any wrongdoing, but let's be honest, their word means absolutely nothing. Banks gonna bank. There are serious questions we have to ask about Coinbase. Like: how is it possible that a crypto institution that's been around since 2012 holds so little BTC? They should obviously have more than Saylor and they don't even have as much as Telsa (even after Telsa sold a bunch last cycle). That's just embarrassing.
What does issuing IOU BTC even mean?
Quite simply it would mean that Coinbase is borrowing BTC by proxy and dumping it on the market instead of buying it like they are legally obligated to do on Blackrock's behalf. Do we really think that institutions like Blackrock and Fidelity aren't going to check? Their entire business model is different from exchanges in that the incentives are actually in alignment to play by the rules and get the most people HODLing inside of their funds.
The ETF model is fundamentally different than an exchange in that an exchange makes all their money from volume and trading fees, while an ETF makes all its money by just raking a fee from the holders on a yearly basis. Blackrock has zero financial incentive to stop the price from going up. A higher price means more money for them.
There's a massive disconnect here in that people that parrot baseless conspiracy theories like this seem to mistakenly believe that Blackrock wants the price to be low so they can buy Bitcoin on the cheap. Yes, well, that's not how it works. Blackrock and Fidelity are money management firms. The vast majority of the wealth under their control doesn't legally belong to them. If their clients want to buy something they don't care what the price is; that's not how they get paid.
Analyst Tyler Durden, among others, has publicly accused Coinbase of supporting these operations, implying that BlackRock may utilize these borrowed Bitcoin tokens to short the market, causing volatility.
This logic is nonsense.
The entire point of printing paper Bitcoin would be to make sure the price trades sideways during the current crab market. That's the OPPOSITE of volatility. Price has been extremely stable for 6-months straight. This is an epic consolidation as we head into 2025. Pressure is building.
Should we trust them?
We should neither trust Blackrock, Fidelity, Coinbase, or anyone else. That's the entire point of crypto: Be your own bank. At the same time these funds have unique access to retirement funds that can't get exposure to Bitcoin in any other way. There's an undeniable amount of utility in that fact, even if that utility is 100% derived from regulations and the legal inability to self-custody a retirement account.
Conclusion
There's no sugar coating that Coinbase has gotten too big for its britches. There's definitely a systemic threat lingering here now that they secure several different ETFs at the same time. I would not be surprised if the 2026 bear market was fueled by a complete nuclear meltdown at Coinbase. However, these baseless accusations are not helpful in the slightest. Let's not forget that the Boy Who Cried Wolf got eaten in the end.
I have to assume that a lot of these fears stem from FTX PTSD. After all shorting Bitcoin is exactly how that entire scam blew up when we crashed to local lows at $16k. I'd like to think that Coinbase and Blackrock are smart enough to realize that shorting Bitcoin in this environment right before the fourth year in the cycle would be the absolute stupidest thing anyone could possibly do. Maybe I give them too much credit, or maybe not. At the end of the day we have to remind ourselves that while the accusations are irrational: the fear that birthed them is not.