- Bitcoin’s current price largely influenced by leveraged derivatives.
- Less than 2% of trading volume stems from genuine investors; the vast majority is attributed to Tether and insiders.
- A potential market collapse may loom large, catching many off guard.
Bitcoin, the pioneer of the cryptocurrency world, has always been at the center of market discussions, be it for its meteoric rises or dramatic falls. But what if the foundations of its recent price surges are less solid than many believe?
Recent on-chain data presents a concerning picture. The main driver behind Bitcoin’s price isn’t genuine demand or wide-scale adoption. Instead, it’s largely being pushed up by leveraged paper Bitcoin derivatives. These derivatives are further collateralized by stablecoins, many of which seem to be materializing out of nowhere.
- All on-chain data shows that Bitcoin's price is being entirely influenced by leveraged paper Bitcoin derivatives, collateralized by stablecoins that are being created out of thin air.
- Less than 2% of the volume represents actual investors buying, while 98% is from Tether and…
- WhaleWire (@WhaleWire) October 26, 2023
What’s even more alarming is that genuine buying from actual investors represents a minuscule part of the trading volume, less than 2% to be precise. This raises the question: who’s driving the other 98%? Evidence suggests that it’s largely influenced by Tether, a controversial stablecoin, and insiders who might have significant stakes in manipulating the market trajectory.
If these observations hold, the crypto community could be on the precipice of a significant downturn. When leveraged positions get liquidated, and if doubts arise about the real backing of these stablecoins, there could be a cascading effect, leading to a sharp market contraction. Many traders and investors, especially those new to the crypto arena, might be caught completely unaware.
It serves as a potent reminder that in the volatile world of cryptocurrencies, diligence and skepticism can be as valuable as optimism and belief. As the old adage goes, “If it’s too good to be true, it probably is.”