The price of bitcoin has dropped 72.9% in USD value since the crypto asset’s all-time high ten months ago and recently, bitcoin’s been trading for just under $19K per unit. Two influential crypto market experts have discussed this week how governments can suppress the bitcoin markets through shorting it. However, one of the individuals notes that the odds of doing so are “in the 0%-1% range.”
‘Enough Shorts in the System to Suppress Price’
Bitcoin’s price has been lower this week following the initial drop after the U.S. consumer price index (CPI) published last Tuesday which showed inflation was higher than expected. The U.S. Federal Reserve could raise the benchmark rate, which would mean that the cryptocurrency economy may see an additional leg down.
The Crypto Fear and Greed Index (CFGI) shows sentiment has dropped from “fear” to “extreme fear” over the last day. Sat., the Bitcoin analyst Willy WooA thread was published about how the potential for unlimited derivatives or fiat markets to suppress Bitcoin prices.
The thread, called “A dummies guide to selling 42 million BTC,” talks about how Arthur Hayes created the first “BTC casino that real people used, trading billions per day.” Woo remarked that “Arthur gloriously opened the way for us to sell 10 BTC even when we only had 1 BTC — We just need people to take the other side of our bet,” Woo added.
After describing how Hayes created Bitmex in his own fashion, Woo discussed how CME Group, the world’s largest derivatives exchange, “launched a BTC casino where you could front USD to play.”
“Wall Street hedge funds loved that,” Woo’s Twitter thread notes. “What’s the limits on selling BTC now? Unlimited. Fiat is unlimited.” Woo further detailed that BTC had a $0.37 trillion market cap while the U.S. dollar is around $22 trillion.
The analyst added that $1.1 trillion was created during the last year and said the “theoretical shorting power with fiat” is colossal and that it’s “billions of BTC.” Woo stressed:
BTC doesn’t have to be killed, it just needs enough shorts in the system to suppress price. Without a large market cap, BTC doesn’t get to make global impact.
Bitcoin Taming
Woo isn’t the only person to discuss matters in this way, as a number of crypto proponents have said that bitcoin derivatives markets and even exchange-traded funds (ETFs) could harm BTC’s value. Investors were afraid of this fear long before CME Group launched BTC futures markets.
Years later, a few studies indicated that it was possible institutional investors could be manipulating bitcoin’s price. CME Group is exposed to many brokerage firms around the world and CME bitcoin futures were swapped this August at The largest discountTo spot prices since the beginning of trades in 2017.
In November 2017, the chairman emeritus of CME Group, Leo Melamed, told Reuters reporters that bitcoin was becoming a “new asset class.” However, Melamed also said it was “a very important step for bitcoin’s history” and that CME Group would “regulate, make bitcoin not wild, nor wilder.” Melamed further stressed:
We’ll tame it into a regular type instrument of trade with rules.
Alex Krüger Says Shorting Bitcoin’s Price so People Lose Interest Permanently Has a Low Probability
The economist, trader and entrepreneur will be speaking on Saturday Alex Krüger tweeted that “governments could stop bitcoin pretty simply.” Krüger further addedHow it was possible. “Just short it. It should not exceed $10,000. [and]Watch how most people lose their interest forever. No need to bother with 51% attacks.” The economist also added that his statement was a copy and paste of the very statement he saidThis is a very unlikely scenario in 2019.
“Can it happen?” Krüger asked. “Sure can, I covered the mechanics in the original thread. It is possible? I’d place the odds in the 0%-1% range.” Krüger also mentioned Willy Woo’s Twitter thread and when someone responded that it was “much more feasible to just ban PoW under climate control rhetoric,” Krüger replied: “100%.”
In Woo’s Twitter thread some people said that removing BTC from spot market exchanges was the best way forward. At the time of writing, crypto exchange data from cryptoquant.com indicates that there’s roughly 2.3 million BTC stored on centralized trading platforms.
“[Bitcoin]A lower price equals more buyers [and] taking it off exchanges,” Dr Crypto Tony said. “This makes BTC more expensive. They can’t manipulate it like silver [and]People have their own custody of gold. Its price rises when more people purchase and keep it individually. Take [it] off exchanges.”
What do you think about the discussion regarding shorting bitcoin and governments suppressing bitcoin’s price? Please comment below to let us know your thoughts on this topic.
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