Hedera’s HBAR Doubles on Misinterpretation of BlackRock Announcement, Then Falls 25%

• Hedera’s HBAR token rallied Tuesday after a foundation supporting the project announced that BlackRock’s U.S. Treasury money market fund had been tokenized on the Hedera blockchain.

• The token gave back some of its gains when investors realized BlackRock was not directly involved.

• BlackRock later told CoinDesk it has “has no commercial relationship with Hedera nor has BlackRock selected Hedera to tokenise any BlackRock funds.”

Sometimes the use of the passive voice is just clumsy writing; other times it’s a grammatical structure to which investors need to pay close attention.

The HBAR Foundation, which supports the Hedera ecosystem, announced Tuesday that shares in BlackRock’s ICS U.S. Treasury money market fund had been tokenized on the Hedera blockchain in collaboration with Archax. Hedera supporters on social media jumped to the conclusion that BlackRock chose Hedera to tokenize its fund, and the blockchain’s native HBAR token surged by over 107%.

But while shares in BlackRock fund had indeed been tokenized, it wasn’t the world’s largest asset manager that did the tokenizing – which could explain why the foundation’s announcement carefully said the fund “is tokenized,” not “BlackRock has tokenized.” Once the market realized this, HBAR slipped 25%.

A spokesperson for BlackRock told CoinDesk late Wednesday: “BlackRock has no commercial relationship with Hedera nor has BlackRock selected Hedera to tokenise any BlackRock funds. As we have in the past, BlackRock will communicate directly with the public on the evolution of our digital asset strategy.”

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Archax CEO Graham Rodford said “it was indeed an Archax choice to put [the fund] on Hedera,” in response to criticism about misleading marketing from Hedera supporters.

BlackRock entered the real-world asset (RWA) tokenization sector last month when it launched its USD Institutional Digital Liquidity Fund on Ethereum.

The HBAR token is still up by 61% over the past 24 hours, but the 2% market depth remains relatively thin, with $900,000 in cumulative bids on the Binance and Upbit order books within 2% of the current price of 14 cents. The token has over $2.6 billion in trading volume over the past 24 hours, according to CoinMarketCap.

CoinGlass data shows funding rates across all derivative exchanges are heavily negative, which means those holding short positions have to pay those holding long positions, indicating a bearish bias. The ratio of longs and shorts on Binance is currently 0.85.

The weighted short interest, coupled with a lack of liquidity, creates a landscape for a volatile trading period that could culminate in a return to parity or a short squeeze, with open interest having risen by 442% to $160 million in the past 24 hours.

UPDATE (April 24, 2024, 15:05 UTC): Edits headline, subhead and first three paragraphs for clarity.

UPDATE (April 24, 22:06 UTC): Adds statement from BlackRock.

CORRECTION (April 24, 21:59 UTC): Corrects article throughout to say that the HBAR Foundation, not Hedera, announced the tokenization.