BlackRock Warns: Stablecoins Pose a Threat to Bitcoin
Date: 2023-11-16 Author: Dima Zakharov Categories: CRYPTO PAYMENTS, IN WORLD
BlackRock’s Cautionary Note
BlackRock, a major contender in the Bitcoin ETF competition, has issued a warning regarding stablecoins, particularly mentioning USDT and USDC. In a document submitted to US regulatory authorities, the company outlines the intricate challenges within the ever-evolving cryptocurrency sphere. Although BlackRock’s trust doesn’t currently invest in stablecoins, it acknowledges potential risks these assets pose to the Bitcoin market and other digital asset markets.
Volatility Concerns
Despite the expectation of stable prices for stablecoins, BlackRock representatives emphasize that their market value can fluctuate. The document, dated July of this year but recently made public, points out that the past volatility of stablecoins has influenced Bitcoin prices. As stablecoins are a relatively new phenomenon, BlackRock specialists assert that understanding all the risks they may introduce to the Bitcoin market is currently impossible.
Artificial Demand and Bitcoin’s Price
BlackRock raises a specific concern that using stablecoins for Bitcoin payments may generate artificial, rather than genuine, demand for BTC. This artificial demand could artificially inflate the price of Bitcoin. The company underscores the potential consequences of such dynamics on the overall stability of the cryptocurrency market.
Institutional Influence and Bitcoin’s Future
Former CEO of the cryptocurrency exchange BitMEX, Arthur Hayes, recently expressed concern about institutional interest in Bitcoin, suggesting it may lead to an undesirable scenario. According to Hayes, asset managers like BlackRock essentially act as “state agents” and operate according to state directives. The increasing institutional interest in Bitcoin raises questions about the potential impact on the decentralized nature of the cryptocurrency.
Galaxy Digital’s Price Prediction
In a related development, Galaxy Digital predicts a sharp increase in Bitcoin’s value once it surpasses the $36,000 mark. This forecast adds another layer to the ongoing discussions about Bitcoin’s future trajectory, considering the various factors, including institutional sentiments and concerns raised by industry leaders like BlackRock.
