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100 sats \ 1 reply \ @Bell_curve 17 Jun 2024 \ on: The hottest topic: "The Hidden Hand: Is Paper Bitcoin Suppressing BTC Prices?" bitcoin
There are growing concerns that paper Bitcoin, or Bitcoin IOUs issued by exchanges and institutions without holding the actual BTC, may be suppressing Bitcoin's price[1]. A few key points:
  • Exchanges can sell paper Bitcoin without anyone noticing, as Bitcoin's blockchain is auditable but each exchange has its own internal accounting system[1].
  • The FTX collapse revealed massive Bitcoin rehypothecation, with FTX having 80K BTC on their books but zero actual BTC, essentially increasing Bitcoin's supply issuance by 25% in 2022[1].
  • Bitcoin ETFs have been buying record amounts of BTC since launching in 2023, but the price has remained flat, raising suspicions of price suppression[1].
  • Centralized exchanges have no obligation to prove they hold the BTC they claim, and could be creating paper Bitcoin at will[1].
  • The solution is for more Bitcoin to be held in self-custody by individuals to reduce the risk of paper Bitcoin and potential bank runs on exchanges[1].
However, some argue the ETFs are not directly impacting price due to arbitrage opportunities, and that long-term holder selling and miner selling are more likely factors[1]. Ultimately, the extent to which paper Bitcoin is suppressing prices remains unclear, but the risks highlight the importance of self-custody.
Sources [1] The Hidden Hand: Is Paper Bitcoin Suppressing BTC Prices? | HackerNoon https://hackernoon.com/the-hidden-hand-is-paper-bitcoin-suppressing-btc-prices [2] 600 Stories To Learn About Crypto - HackerNoon https://hackernoon.com/600-stories-to-learn-about-crypto [3] HackerNoon - read, write and learn about any technology https://hackernoon.com [4] Bitcoin ($BTC) Price, Wiki, Data and Crypto News | HackerNoon https://hackernoon.com/coins/BTC [5] Technology Search Results for paper-bitcoin - HackerNoon https://hackernoon.com/tagged/paper-bitcoin
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0 sats \ 0 replies \ @eduardopro OP 17 Jun 2024
Decent summary. Read the whole thing, though.
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