There was another turbulence in the crypto world today. Based on the perceived BlackRock connection, the Hedera Hashgraph’s native token HBAR exploded with a 100% jump from $0.09 to $0.1803 at 6AM Indian standard time. At the time of writing, it was hovering around $0.12 again, a 33% fall from the peak.
HBAR’s market cap now stands at $4.77B, and prices now volatile around the $0.12-0.13 range. The entire saga meant a lot of activities, tweets and trades for HBAR.
BlackRock’s name popping up in the Hedera universe was enough to set the prices soaring, but that quickly collapsed as news kept coming from all sides.
How did BlackRock get involved?
HBAR foundation made a tweet on April 23rd evening and we quote:
“Today we witness #RWA history as @BlackRock’s ICS US Treasury money market fund (MMF) is tokenized on @Hedera with @ArchaxEx and @OwneraIO, marking a major milestone in asset management by bringing the world’s largest asset manager on-chain”
The tweet went viral with over 2.5 million views. A lot of traders took it as a confirmation that BlackRock had chosen Hedera for their fund tokenization. Getting BlackRock on-chain was a big development for Hedera Hashgraph and its native token, HBAR.
Hedera’s supporters started rejoicing on social media.
It was similar to ether supporters being happy when ethereum proves superior to other blockchain networks and ether price skyrockets. But:
What had actually happened?
So- before we get to today’s events, here is some background.
BlackRock is the world’s largest asset management company with $10 trillion in AUM as on 31st December 2023. This means they handle more money than any country on this planet except the US and China.
BlackRock had earlier launched its first tokenized fund on Ethereum blockchain a month ago. This private fund known as BlackRock USD institutional Digital Liquidity Fund (BUIDL) could amass over $240 million in deposits in just a week as per Bloomberg. The major difference here with tokenized funds is that there is no counterparty risk to any cryptocurrency company.
The push from BlackRock means the overall RWA space also registered healthy growth & crossed the $1 billion valuation mark on march 28th. According to RWA.xyz, tokenized treasuries now have average yield to maturity of 5.02% and there are 1723 holders for these treasuries. Along with BlackRock, Franklin Templeton is another major issuer of tokenized treasury assets.
Market capitalization wise, ethereum still is the highest blockchain network for tokenized treasuries. Steller, Solana and Polygon bagged the second, third & fourth place respectively.
Meanwhile, the market size for RWA itself is expected to cross $10 trillion by 2030.
On this backdrop, the news broke about BlackRock “selecting” Hedera blockchain for fund tokenization. But, BlackRock had not directly selected Hedera for tokenization.
Who selected Hedera, if not BlackRock?
The announcement actually meant Archax, HBAR foundation and Ownera have made this tokenization possible. Archax CEO Graham Rodford later confirmed that “it was indeed an Archax choice to put [the ICS US Treasury MMF fund] on Hedera,”
To give some context, Archax is a regulated digital assets exchange, custodian and broker based out of London with 8 employees. Per Rodford, given their regulatory status, they are one of the only places that can create, custody & trade these tokens. It was Archax’s choice but everyone involved was aware.
So, if not directly, indirectly, Hedera was approved by BlackRock too.
However, since the news was already out that it wasn’t exactly BlackRock who chose Hedera, the price of HBAR started falling again. Now it is down 33% from its peak already, but not falling any further.
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What do we learn?
This entire episode underscores how volatile the crypto market can be. The current ratio of trading volume to market capitalization is 70% . Volumes in the last 24 hours were up by 7900%. That is an intense level of activity for any crypto.
Thus, it is extremely important to be careful about investing and trading in cryptos. As the popular crypto currency handle @TheOCcryptobro pointed out on X: “it gets so tiresome!” – It really IS tiresome if your hard-earned money is at stake while such volatility comes into play.
We hope this incident remains in the memory of investors & traders when the next euphoria strikes!
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Disclaimer: Investing in cryptocurrencies or crypto tokens are extremely risky. The above content is for informational purposes only. Please consult a SEBI-registered investment advisor before making any investment decision.
