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. This week two prominent crypto market influencers have been discussing how governments could suppress bitcoin markets by shorting the crypto asset. However, one of the individuals notes that the odds of doing so are “in the 0%-1% range.”
‘Sufficient reduction in the system to drive down the price’
The price of bitcoin has rallied this week after an initial drop after the US Consumer Price Index (CPI) was published last Tuesday, which showed inflation was higher than expected. Furthermore, the crypto economy, in general, could see another leg down after the US Federal Reserve raised the benchmark bank rate.
The Crypto Fear and Greed Index (CFGI) shows sentiment has dropped from “fear” to “extreme fear” over the last day. On Saturday, the bitcoin analyst Willy Woo published a thread about the possibility of unlimited fiat and derivatives markets suppressing bitcoin prices.
thread, which is called “A Dummy Guide to Selling 42 Million BTC”, talks about how Arthur Hayes created the first “BTC casino that real people used, trading billions per day.” Wu commented that “Arthur brilliantly opened the way for us to sell 10 BTC while we only had 1 BTC – we just need people to take the other side of our bet,” Wu said.
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 liked that,” Wu’s Twitter thread notes. “What is the limit for selling BTC now? Unlimited. Fiat is unlimited.” Wu further elaborated that BTC had a market cap of $0.37 trillion while the US dollar stood at 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 need to kill, it just needs enough shorts in the system to suppress the price. Without a large market cap, BTC does not have a global impact.
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. This fear has scared investors well before CME Group introduced BTC futures markets in 2017.
Years later, some studies indicated that it was possible that institutional investors could manipulate the price of bitcoin. CME Group has a myriad of exposures to brokerage firms around the world, and this August the CME bitcoin futures swap took place. biggest discount To spot prices since the start of trading 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 will convert it into a regular type of instrument of trading with rules.
Alex Krüger Says Shorting Bitcoin’s Price so People Lose Interest Permanently Has a Low Probability
On Saturday, the economist, trader, and entrepreneur Alex Krüger tweeted that “governments could stop bitcoin pretty simply.” Krüger further added how it was possible. “Just short it. Keep it under $10,000 for a long while, [and] watch most people lose interest permanently. No need to bother with 51% attacks.” The economist also added that his statement was a copy and paste of the very statement he said in 2019, and that the probability of this type of thing happening is fairly low.
“could be possible?” Kruger asked. “Sure, I covered the mechanics in the original thread. Is that possible? I’ll keep the odds in the range of 0%-1%.” Kruger too mentioned Willie Woo’s Twitter thread and when someone responded that it was “far more feasible to ban PoW under climate control rhetoric,” Kruger 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] Lower price means more people are buying [and] Taking it off exchanges,” Dr. Crypto Tony said. “It makes BTC more expensive. They can’t manipulate it like silver [and] Gold because people have self-restraint. As more people buy and hold individually, finite BTC increases in price. Take [it] off exchange. ,