BlackRock deliberately driving down Bitcoin price in anticipation for Spot BTC ETF approval, analyst says

  • Analyst Crypto Rover attributes the current lull market to BlackRock, accusing the asset manager of deliberately driving down Bitcoin price.
  • In his opinion, the firm is trying to achieve a better buying position so that the ETF earns them more upon approval.  
  • While this is mere speculation, it is a reminder for retail investors to be more analytical in a market swayed by big players.

BlackRock asset manager is among the list of institutional players awaiting a decision from the US Securities and Exchange Commission (SEC) after filing applications for Spot Bitcoin Exchange-Traded Fund (ETF) approvals.

Also Read: The BlackRock and crypto connection is much deeper than what people know of

BlackRock driving Bitcoin price down deliberately, Crypto Rover

While the market awaits a decision from the US SEC, crypto enthusiast and renowned analyst Daan de Rover (Crypto Rover) says BlackRock asset manager is deliberately driving Bitcoin price down. His thoughts are based on the argument that the company would “require actual Bitcoin to back their Spot ETF” if approval comes.

In this regard, Rover presents two perspectives:

They might have already purchased their Bitcoin months ago when prices were lower. Or, they could be driving down prices deliberately to establish a better buying position for themselves.

He wagers on the latter, noting that they would be fighting to keep prices up if they had bought earlier. Therefore, a surge in prices, possibly steered by a Spot BTC approval, would earn them more value against their purchase price.

Crypto Rover has built a career helping investors understand cryptocurrency trading through free educational content on different topics. These range from basic investing basics to advanced technical analysis.

Institutional investors buying Bitcoin

According to renowned Bitcoin writer Mark Helfman, institutional investors rarely buy BTC directly lest they expose themselves to legal and regulatory risks. Instead, they leverage custody solutions to conceal their activities. Helfman cites “large buyers and sellers” who “find a broker for a private sale and settle the exchange in batches.”

The transactions happen outside the exchange at an agreed price different from the spot price indicated on the exchange. In Helfman’s words:

Since bitcoin is pseudonymous and you can create new wallets ad nauseum, plus brokers are not obligated to report private deals, it’s difficult to know who’s moving money where without forensic technology or an insider who knows about the deal.

As a result of this, buying and selling often happens without affecting the price of Bitcoin, meaning it may go unnoticed on a chart because they tactfully buy just enough at any given time not to disturb the price. That said, large holders can still also dump Bitcoin to drive down the price.

More broadly, institutional investors are more experienced, knowledgeable, and have more connections. Given their mostly huge Assets Under Management (AUM), it only takes a small fraction of their holdings to influence Bitcoin price. 

Institutional investors are usually highly secretive about their dealings. By the time retail traders know an institution has made a move it is usually too late, says Helfman. They would only announce “We are interested in buying,” for example, after they had already bought.

If there is any truth to Rover’s assertions, then it highlights the role and influence of big corporations in driving the market. It also reminds retail investors to be more analytical in a market swayed by big players.

Crypto ETF FAQs

What is an ETF?

An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.

Is Bitcoin futures ETF approved?

Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.

Is Bitcoin spot ETF approved?

Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.

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