The majority of Bitcoin proponents have remained bullish as they go all-in on the oldest and most valued cryptocurrency the world has ever known. With whales betting big on Bitcoin, buying pressure has increased immensely, so much that Bitcoin saw over a 35% increase in the value to its current price within the last two weeks.
This makes it easy to forget that bearish speculations have also trailed this billion dollar industry, and this analyst has recently taken to Twitter to throw light on the possible bearish market that the Crypto-space may experience in coming months.
Usually, miners are generally expected to heighten selling pressure due after every Bitcoin halving event, the popular on chain analyst and futures trader Willy Woo is convinced that this year’s post-halving rallies will be captained by cryptocurrency exchanges.
Miners will not influence selling pressure as much as Exchanges will
According to Woo, the tradition of miners massively flushing out Bitcoin will come to a halt. Instead, exchanges will take the front row and push the bears as high as they can afford to. This means that the usual pattern of miners accumulating Cryptocurrencies in order to cover mining fees and manage their revenue which will certainly take a downswing as a result of the halving effects, will not contribute to the market volatility as much as exchanges will.
Woo is not the only crypto-personality to have mentioned this, Infact Garrick Hileman, an economist and researcher at Blockchain.com had recently expressed similar views. Hileman opined that miners selling will be a lot less impactful than previous years. And Woo, taking it a step further has laid out multiple reasons as to why he’s objectivity standing on that hill.
Miners will sell, but exchanges will sell ten times more
Woo begins with an analogy that positions exchanges as tax collectors and traders as tax-payers whose fees are sold by said exchanges in return for fiat. This is usually referred to as “market buyers and sellers” which actually just means “smart money buying and selling.”
The effects of this buying will create what Woo calls an “unmatched buying pressure” that will result in the amassing of gigantic returns in funds, which then goes into the futures market and increases futures trading volume thereafter. To give a range, Woo estimates that exchanges can easily raise “$400m of monthly futures trading volume from a $500k collateral account when trading short term candles.”
The end product is market volatility all over again
Citing an example with leading crypto-futures exchange Bitmex, the analyst believes that the spike in the exchange’s trading volume since the last four years reflects that futures trading has significantly contributed to price volatility.
Interestingly, Woo admits to being a futures trader too. Still, he asserts that the “number go up” vision that could turn Bitcoin’s market cap into trillions will continue to be hindered by futures trading, no matter how much liquidity it brings.
The CEO of Binance Doesn’t quite agree
Meanwhile, the founder of Binance who is known to be very vocal on Twitter immediately responded to Woo’s tweet by defending the Binance exchange.
Stating that the exchange only receives fees in its native coin (BNB), the CEO said that the exchange only sells “enough to cover our expenses, which is far lower than our income” and holds the remaining funds.
