Is the crypto winter over?

[johnarb]

Traders are buying and selling.

This. Market making firms make a lot of profits, but the US is cracking down on crypto firms, so the biggest ones left the US, Jump and Jane Street

I think this is a good thing, but it is just me. If it were up to me, I would shutdown every single Traditional Finance company in the US involved with Bitcoin and cryptos

The crypto markets actions are on the offshore markets, like Binance that does over 10x the trading volume of Coinbase

There are days that even a dex like Uniswap has more trading volume than Coinbase

 

[johnarb]

I to this day don't understand the figure of how much supply is at exchanges. The numbers quoted are that there are 2 millions coins on exchanges.

The only way I can see to verify this is via all the cold and hot wallets of these exchanges. But the thing is that these wallets have to hold bitcoin that are already spoked for by the customers. We know FTX had 80k bitcoins that they didn't own but were on the books are being owned by customers. Even if FTX had a wallet with 80k bitcoins, FTX themselves wouldn't have been the owner of this. Would articles be claiming that 80k bitcoins are on exchanges? Technically all those coins were already spoken for. So if if someone show me a Binance wallet with 100k coins, this doesn't mean it has this many to sell.

If 2M are on exchanges waiting to be sold, how did the exchanges accumulate them? Did they buy them from the miners? I thought miners are reluctant to sell. I use an exchange that is local to my country. They don't do any shady lending and don't even have staking, and have some sort of backing like banks to protect deposits, so I feel good having some cash there and also bitcoin that I wait to withdraw until its a big enough move. (I don't want to have hundreds of UTXO's in my wallet) So I wonder how much bitcoin they actually own. Its a small business so its not like they have 1,000 bitcoin just waiting to be bought. And this is my point. I don't think there are exchanges out there that hold a shit ton of inventory as if they are valued are hundreds of millions or billions of dollars. How did the exchange get so rich to have this much inventory?

When you start a car dealership, you need to have cars on the lot to sell. But in order to do this, you have to get a loan from the bank. Perhaps the car manufacturer lets you borrow the car until it is sold so it can sit on your lot and costs you nothing. But somehow, if you're gonna have 30 cars on your lot, you need to have lots of money because I think most times, that car has to be purchased before you sell it to the customer. So how do exchanges have 2 million BTC in their possession that 100% belong to them so they can sell them?

So I honestly have no idea how this fits into all of these calculations. Of course the beautiful thing about bitcoin is that we can see where all the coins are. I've seen posts that show the biggest wallets and who own them, but its very sparse.

When you deposit money in the bank, the money belongs to the bank and if they blowup, you have to through the FDIC process or bankruptcy

When you deposit bitcoins to a cex, they belong to the exchange and if they blow up, like Celsius, Voyager, Bittrex, FTX, then you have to go through the bankruptcy

However, FTX is a big fucking scam and stole all the bitcoins

This is not the same with Bittrex who declared bankruptcy to get the US regulators off their back and have already said all the bitcoins and cryptos will be returned to every single user, not a single satoshi will be lost

That's the difference between a scam exchange blood sucking thief crypto exchange and a legitimate crypto exchange

A legitimate crypto exchange will hold 1-to-1 every single satoshi that belongs to its users along with all the other crypto assets

 

[The_Krakenite]

I am not sure FTX was a scam, but more of a failing company that decided to double-dip into restricted funds in order to try to gamble and save itself.

Still illegal, but I'm not so sure it started out as just a scam. Quadriga is another story...

 

[schizo]

I am not sure FTX was a scam, but more of a failing company that decided to double-dip into restricted funds in order to try to gamble and save itself.

How do you explain all the political donations and briberies? This is way more serious in scope than mere embezzling IMO.

 

[The_Krakenite]

How do you explain all the political donations and briberies?

The US government is corrupt, we all know that. Year after year this keeps bring brought up, but (surprise), never gets fixed.

Maybe before we worry so much about Mr. Bankman, we should worry about Soros. Here is a man who evaded paying taxes during his career. Not only did he evade taxes, but he made substantial amounts of wealth while avoiding paying them, and setting up a huge haven for crooks offshore.

Now, if you or I don't pay taxes, even on a far, far, far lesser amount... we go to prison.

Note: Soros donates more to these political parties than anyone else.

 

[themickey]

I am not sure FTX was a scam

 

[NoahA]

My understanding is that the exchanges function is to match buyers with sellers. They may run their own book but for the most part they just find you a buyer when you want to sell or vise versa.
The miners have to sell some product just to pay the bills. Traders are buying and selling.

So taking this into account, and along with John's comments, then I see implications of this.

The biggest is that whenever a source claims 2 millions coins on exchanges and falling, this is a worthless stat. Its almost like the real estate industry saying 200 houses are on this square block. If only 1 is for sale, it doesn't matter that 199 other houses are sitting there. Likewise, if 2 million bitcoins are on exchange, and none belong to the exchange since they aren't selling so called inventory, then we have no idea how many of those coins are actually liquid. Sure, there is a price at which anyone would sell, but we really don't know.

95% of those coins could just belong to people who trust the exchange, or are worried about using a hardware wallet. These could be coins in so called "cold storage" but secured by a custodian vs. your own private keys. Therefore, it doesn't matter how many coins are on exchange. If anything, there could easily be a run on the exchange, like a run on a bank, and all deposits/coins could be gone in days. So once again, its a meaningless metric to say how many bitcoins are on exchange.

I looked at this from the point of view of an exchange facilitating selling inventory. I assumed miners were somehow connected to exchanges. Kind of like how you have a manufacturer selling to a wholesaler, or like my car example, you have car dealer than needs to buy inventory so they have something to sell to the customer.

The other thing is that I'm not sure how well an exchange can match up orders while also taking into account prices from other exchanges. Imagine you want to buy 10 BTC through your little exchange, but they only have a total of 1 to sell within lets say a $1k spread. A big exchange could handle this, but not a little exchange. Now will you get massive slippage at your little exchange, or will your exchange give you a good price and then go source those bitcoins somewhere else? Of course it will take them multiple 10 minute time slots in order to acquire that inventory, so who wants to take that price risk.

Yes, I have seen reports of some exchanges having 5k price discrepancies, but I imagine it should be way more common if the only thing that matters is the order books at each little exchange vs. reference to the pricing at bigger exchanges.

I've learned a lot from Caitlin Long about how the banking system works. Its scary to see how given electronic transfers, a bank can become insolvent in hours or days, and this new FedNow system just helps to faciliate that even faster. Likewise, any talk about bitcoin inventory on exchanges is kind of pointless since we don't know how many of those coins in customer's accounts are actually for sale. 5% of coins could be doing all the trading, while 95% lay dormant. Before you know it, those same 5% of coins no longer selling can account for a 100% rise in price in hours. All the talk of 2 million coins on exchanges is actually a distraction.

 

[deaddog]

Honestly @ NoahA I don't know for sure.
An exchange is where you exchange your fiat for cryto and crypto for fiat. In either case I would put whatever I have in my own wallet.
In the stock market you deal with a broker who makes your trades on an exchange. The exchange doesn't hold my stocks or my cash, the broker does.
In Canada the exchange I dealt with was Newton. They traded, bought and sold crypto, but also held crypto and cash in my account. Like a broker they made trades and charged a fee, commission or spread (1% each way). I could withdraw to my bank account or crypto wallet.
I'm not sure where they arranged to do the trades.
I would hope that the exchanges are linked like the stock market but I'm not sure. If not there will be some arbitrage opportunities.

 

[schizo]

Note: Soros donates more to these political parties than anyone else.

I don't think it's entirely fair to compare SBF to Soros. Soros is a sly old fox who knows how to maneuver his way around the system. But SBF? That dude was not even 30 at the time with no track record to speak of. But, yeah, I get where you're going with this.

 

[johnarb]

So taking this into account, and along with John's comments, then I see implications of this.

I'm not an expert but I've seen some videos on the way crypto markets work, which they have taken the models from the equities and futures market

Even though I don't understand it, there's things like selling spot bitcoins and buying futures, and terms like backwardation and contango, and risk-free returns (hedged, delta-neutral) positions

There's other stuff like prime brokers Genesis, Celsius, Voyager, BliockFi who were lending stablecoins and crypto assets to the hedge funds traders that were arbitraging among all the global exchanges

Market makers like Jump and Jane Street left the US crypto markets, there's a thread here started by someone else

Anyway, I used to think of all these traditional finance firms making the crypto markets more efficient, but now I am not a fan of them

Like you, I never understood why Bitcoin doesn't just go up continuously since everyone like us who are bullish are not selling, but then you have all these tradfi companies that make lots of profits from shorting and hedging, but when they blow up, they don't lose, only the Genesis, Voyager, Gemini Earn, BlockFi, Celsius customers are the ones that get hurt...

And that's why I wish they would ban all the crypto firms in the US, all these companies are gone, bankrupted, and liquidity is low

What we need is liquidity or a big news, then none of these companies have access to stablecoins and crypto assets to borrow from the prime brokers that are gone and bankrupt so they can short, then we'll see what happens, no more FTX, Alameda selling stolen bitcoins and cryptos

For now, let the shrimp army continue to buy and accumulate bitcoins and withdraw from exchanges, coiling the springs even more....