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