Bitcoin, ethereum and other major cryptocurrencies have struggled to maintain momentum after charging higher through July.
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The bitcoin price, down around 70% from its all-time highs, had begun to rally last month but has since stalled as traders await a Federal Reserve bombshell and a “hundred-pound gorilla gets closer by the day.” The price of other top ten coins ethereum, BNB
BNB ,XRP
XRP solana, cardano and dogecoin have also struggled.
Now, BlackRock, the world’s largest asset manager with $10 trillion in assets under management, has partnered with major crypto exchange Coinbase to provide its institutional clients with access to bitcoin.
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MORE FROM FORBES‘A Positive Catalyst’-Bitcoin Price Now Poised For A Huge $180 Billion Fed BombshellBy Billy Bambrough
The bitcoin price has struggled so far this year, weighing on the price of ethereum, BNB, XRP, … [+] solana, cardano and dogecoin.
AFP via Getty Images
“This is a huge milestone for the crypto space, as it demonstrates the demand from BlackRock’s
BLK clients and institutional investors to access bitcoin,” Marcus Sotiriou, analyst with digital asset broker GlobalBlock, said via email. “BlackRock is opening the floodgates for institutions to access bitcoin.”
Coinbase, widely regarded as one of the world’s biggest crypto on-ramps, announced this week it would connect to Aladdin, BlackRock’s investment technology platform that handled $21.6 trillion worth of assets in 2020, allowing the global investment industry access to bitcoin, with more cryptocurrencies potentially added later.
“Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets,” Joseph Chalom, global head of strategic ecosystem partnerships at BlackRock, said in a statement.
BlackRock’s move into the world of bitcoin and crypto comes after chairman Larry Fink called bitcoin an “index of money laundering” in 2017.
“I think this could be seen as a green light by other funds to enter the crypto space too,” Sotiriou added, pointing to a report that found almost a quarter of fund managers expect to increase exposure to crypto-related assets over the next two years.
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MORE FROM FORBES‘Exclusive’ Oversight-Senate Introduces A Radical Crypto Bill As Price Of Bitcoin, Ethereum, BNB, XRP, Solana, Cardano And Dogecoin SwingBy Billy Bambrough
The bitcoin price has fallen sharply this year along with global stock markets, with the price of … [+] other major cryptocurrencies ethereum, BNB, XRP, solana, cardano and dogecoin also struggling.
Forbes Digital Assets
The news has sparked a wave of bitcoin price predictions, with investors claiming BlackRock exposure could see the bitcoin price return to its all-time highs of almost $70,000 per bitcoin.
“As institutional and retail inflows pick up momentum, I predict that we will see bitcoin hit fresh all-time highs by the end of the year,” Nigel Green, the chief executive of asset manager at Vere Group, said in emailed comments. “I would not be surprised for it to hit $70,000, which would surpass the previous all-time high of $68,000 in November 2021.”
“As the infrastructure for institutional investors to place their bets on digital assets grow, so will their involvement in this market,” Mikkel Morch, executive director at Digital Asset Investment Fund ARK36, said via email, adding: “Crypto is simply inevitable at this point.”
The bitcoin price has crashed this year, tanking the wider crypto market and major cryptocurrencies ethereum, BNB, XRP, solana, cardano and dogecoin as the US Federal Reserve battles soaring inflation with a series of historic interest rate hikes and cutting its huge pandemic-era stimulus measures.
Cryptocurrency lender Celsius Network was advertising yields of 17 per cent right up to mid-June when it froze withdrawals and then filed for bankruptcy in New York one month later.
Marketing itself much like a bank but without the same regulations, it attracted a global customer base — including Australians — many of whom had their assets locked up as cryptocurrency prices collapsed and the company ran aground.
The plight of these retail investors was spotlighted in recent weeks by software engineer and frequent cryptocurrency critic Molly White, who began to tweet moving excerpts from hundreds of letters sent to the New York bankruptcy court and shared in court exhibits.
“The stereotype of people who are putting money into crypto is… young, technologically savvy men,” Ms White told the ABC.
“And that did not seem to be the demographic in the letters.
“There were also a lot of people who were saying, ‘this is my life savings, my pension, I worked 10, 20, 30 years to save this money.'”
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Ms White also shared letters from people who said they were based in Australia, many of whom described their utter desperation and even thoughts of suicide after they were blocked from accessing funds.
One woman said the impact on her family had been severe. She included an email she sent to Celsius management begging to be allowed to withdraw some of her funds from her. The email included an ultrasound picture of her unborn child from her.
Others wrote of their emotional turmoil:
“I have lost everything. How can I explain this to my son? I feel ashamed at myself.”
“That was our life savings. It was our chance of having a baby, and funding medical expenses. It was our chance of taking care of our parents as they age.”
A father of three in Australia wrote he had “his life savings in a Celsius earn account”, and that he’d also convinced his father to deposit cryptocurrency assets into Celsius as a “safe haven”.
As well as putting a personal face to the cryptocurrency crash, many of the letters cite the online presence of Celsius chief executive Alex Mashinsky as a key reason for investing.
They bring up his regular YouTube AMA or “ask me anything” sessions, in which he projected supreme confidence until the end, and a willingness to call out what he saw as “misinformation” about his company on Twitter.
Ms White was also struck by how many letters specifically cited Mr Mashinsky, and his online persona.
“Those [AMA sessions] clearly worked really well to build trust in him and in the platform,” she said.
“And people basically believed that Alex Mashinsky as a person would not do this to them.”
Celsius CEO Alex Mashinsky in November 2021, when bitcoin was riding high.(Getty: Piaras Ó Midheach)
‘We’re at the bottom, and we’re trying to be loud’
Claire* is one of the Australians with assets locked up in Celsius who wrote to the judge.
She returned to Australia in 2020 after more than a decade living in the United States, and was after a career change. A university course in financial technology introduced her to cryptocurrencies, and she took a shine to the industry.
But Claire said she struggled to find a job in the field and when trying to start her own businesses, found that Australian banks wouldn’t lend her due to a lack of local credit history.
A US cousin introduced her to bitcoin mining, and she ended up locking away around $US50,000 worth of bitcoin as collateral for a loan from Celsius.
“I was very attracted to their loan facility, because I couldn’t get a loan here for anything,” she said.
“Cryptocurrency for a person who is in that situation is… more attractive.”
While she is not in as dire a situation as some other Celsius customers, Claire said the goal of writing her letter was to ensure the voices of smaller investors were heard as the company’s debts are considered.
It’s still unclear how the process will play out.
Celsius’s terms and conditions warn that an account with the company is “not a checking or savings account, and it is not covered by insurance against losses” and that “any Eligible Digital Assets … may not be recoverable” after bankruptcy.
“The big guys will get the lawyers and they will be loud,” she said.
“We’re at the bottom, and we’re trying to be loud.”
Risk not over for Australian investors
Celsius had approximately 300,000 active users with balances of more than $US100 ($144) as of July 2022, and a $US1.2 billion shortfall when it filed for Chapter 11 bankruptcy in the Southern District of New York.
The company offered a number of services, including the ability to borrow against cryptocurrency assets transferred to the company, or to earn high reward rates on these deposits.
But while its team presented a glossy picture of huge yields, it seemed impossible to some critics that such numbers could be sustained without making potentially hazardous investment choices with the funds of its international depositors.
Campbell Harvey, a professor of finance at Duke University, said the Celsius situation was ultimately simple: “This is a company that basically took customer deposits, if you want to call them that, and then invested in very risky products.”
Among other issues, Dr Harvey said, Celsius appears to have invested in cryptocurrency products that were highly illiquid when the company needed money back quickly.
“Any time you’re promised an 18 per centreturn that is sold as risk free, that is just a red flag,” he said.
Celsius’s bankruptcy filing continues a rough period for cryptocurrencies, and other high-profile platforms including Babel Finance, Vauld and Voyager have run into trouble in recent weeks.
Celsius’s own bankruptcy documents admit it made “what, in hindsight, proved to be certain poor asset deployment decisions.”
Mr Mashinsky’s declaration also cites the high-profile “implosion” of cryptocurrency Luna and its TerraUSD stablecoin as accelerating the onset of a “crypto winter” and prompting an uptick in customers trying to get their money out — akin to a bank run.
The Celsius situation also makes the risks clear for Australian cryptocurrency investors: overseas companies are subject to overseas rules.
Aaron Lane, a lawyer and senior research fellow in the RMIT Blockchain Innovation Hub, said how much local investors ultimately recovered from Celsius was now in the hands of US courts, where cryptocurrency bankruptcies were a relatively new phenomenon.
“That’s something that consumers need to consider at the front end … doing your research and really considering who controls the cryptocurrency that you’re putting in,” he said.
Both Dr Lane and Dr Harvey suggested Celsius’s situation, as well as the litany of other cryptocurrency collapses, was likely to spur government regulation of the industry.
This may include whether cryptocurrency lenders like Celsius will be forced in future to abide by rules set for more traditional financial institutions, such as capital requirements to protect depositors.
“How can consumers know that if they’re putting money into one of these platforms that they can get it back, or at least get a proportion back?” Dr Lane said.
Ms White says there’s a pattern in how cryptocurrency projects are allowed to operate that can’t continue.
“Crypto projects do whatever they want, advertise however they want, run their businesses with basically no transparency and no requirements for how they’re handling their assets, and then [regulators] just wait for them to explode,” she said.
“We can’t afford to have done it as long as we have. People are continuing to get hurt.”
A computer expert who claims to have invented the digital currency Bitcoin has been awarded just £1 in damages after he gave ‘deliberately false’ evidence in a High Court defamation case.
Australian Dr Craig Wright, purportedly Bitcoin creator ‘Satoshi Nakamoto’, sued blogger Peter McCormack for libel over a series of tweets in 2019 that alleged his claim to be the enigmatic inventor was fraudulent.
In a ruling on Monday, Mr Justice Chamberlain concluded the tweets, and a video discussion broadcast on YouTube where Mr McCormack made similar claims, had caused ‘serious harm’ to Dr Wright’s reputation.
But the High Court judge limited Dr Wright’s damages to £1 after he put forward a ‘deliberately false’ case over being disinvited from academic conferences because of the tweets until days before the libel trial in May.
In the tweets made between March and August 2019, Mr McCormack, a podcaster specializing in content about cryptocurrencies, alleged that ‘Craig Wright is not Satoshi’ and is ‘a fraud’.
Australian Dr Craig Wright (pictured), purportedly Bitcoin creator ‘Satoshi Nakamoto’, sued blogger Peter McCormack for libel over a series of tweets in 2019 that alleged his claim to be the enigmatic inventor was fraudulent
Amid complaints from Dr Wright’s solicitors, he tweeted in response: ‘Let’s go to court.’
In the lead-up to the libel trial, Dr Wright initially argued that he had been invited to speak at numerous conferences after the successful submission of academic papers for blind peer review, but that 10 invites were withdrawn following Mr McCormack’s tweets.
This included alleged potential appearances at events in France, Vietnam, the US, Canada and Portugal.
But Mr McCormack submitted evidence from academics challenging Dr Wright’s claims which were dropped from his case at the trial in May.
Dr Wright later accepted that some of his evidence was ‘wrong’ but that this was ‘inadvertent’, Mr Justice Chamberlain said.
The judge noted that there was ‘no documentary evidence’ that Dr Wright had a paper accepted at any of the conferences identified in the earlier version of his libel claim, nor that he received an invitation to speak at them except possibly one and nor that any invitation was withdrawn.
In a ruling on Monday, Mr Justice Chamberlain concluded the tweets, and a video discussion broadcast on YouTube where Mr McCormack (above) made similar claims, had caused ‘serious harm’ to Dr Wright’s reputation
Dr Wright’s explanation for abandoning this part of his case because the alleged damage to his reputation from the ‘disinvitations’ was outside England and Wales ‘does not withstand scrutiny’, the judge added.
He concluded that ‘Dr Wright’s original case on serious harm, and the evidence supporting it, both of which were maintained until days before trial, were deliberately false’.
Lawyers for Mr McCormack argued at trial that his tweets were made in ‘flippant and light-hearted terms’ and were in response to posts by Calvin Ayre, a Canadian businessman, ‘goading others into accusing Dr Wright of being a fraud’.
They also claimed there were ‘numerous other individuals who had posted the same allegations about Dr Wright’, Mr Justice Chamberlain explained in his ruling.
Lawyers also ‘relied upon attempts by Dr Wright to sell the rights to his life story as showing that he had not been hurt by the controversy surrounding his claim to be Satoshi and indeed was trying to exploit that controversy for gain’, the judge said.
But the High Court judge limited Dr Wright’s damages to £1 after he put forward a ‘deliberately false’ case over being disinvited from academic conferences because of the tweets until days before the libel trial in May (stock image of bitcoin)
Mr Justice Chamberlain concluded that although the tweets were ‘flippant in tone’ they came from ‘a well-known podcaster and acknowledged expert in cryptocurrency’.
‘They were unequivocal in their meaning. Many people who read them would have known that there was a lively debate about whether Dr Wright was Satoshi, but some of them must have been influenced by reading Mr McCormack’s trenchantly expressed contribution to that debate,’ the judge continued.
‘The fact that he was willing to state his views so brazenly in response to threats of libel proceedings is likely to have made those who read them more, not less, likely to believe them.’
But the judge said that Dr Wright’s pre-trial case over the serious harm to his reputation made it ‘unconscionable’ that he should receive ‘any more than nominal damages’.
The judge said the identity of Satoshi Nakamoto was not an issue he had to determine in his ruling as Mr McCormack had earlier abandoned a defense of truth in his case.
CoinDesk reported that Dr Wright’s lawyers distributed a statement which read: ‘I intend to appeal the adverse findings of the judgment in which my evidence was clearly misunderstood.’
