Bitcoin Forum

Btc Are limited supply and there is fear on the Market everybody or most will think the fear make holders to sell.
But now AS people Are afraid bit to hold their coins on exchangers it creates exchangers shortages of coins.
I guess thats the reason why btc price quite Stable the supply and demand Even If traders are bearish in fear the funding balance stays negative still on exchangers.
So current ftx case making people more often to withdraw their assets out of exchangers.

Situation looking clear for me it seems to me that exchangers now out of coins and that triggers price up not other way around that people accidently think that current fear situation making crypto to go down the exchangers dont see our emotions but buy sell orders and supply and demand.

We have situation now when many traders holders will withdraw their coins in private wallets.

Quick reminder that people withdrawing from exchanges doesn't automatically mean most of them are withdrawing their bitcoin to their own non-custodial wallets. It could also mean that people are selling bitcoin for fiat then withdrawing to their bank accounts (or for stablecoins, and to their MetaMask wallets).

Exchanges should never go beyond what they have their own reserves, but they do. That's the real problem here. However, I'm quite sure what you're trying to get at here. Although, I wouldn't exactly describe the price of Bitcoin stable, literally ever. It's known for its volatility, and to some extent that's by design for now.

What's for certain is news like FTX isn't exactly great for consumer confidence, especially when we're trying to convince people that Bitcoin is a better alternative to fiat.

Price is going up not if there is more or less coins on exchanges. Price is going up when people are willing to pay more for coins and are buying on the rising price. The end. Number of coins on exchanges does not matter. People can always deposit back in or hedge using futures and leverage when price recover.

Current situation makes people withdraw not only BTC but also stable coins and fiats. So there is less money to buy fewer coins. Net impact is neutral but ... it all cause lower liquidity on exchanges = more volatility = more risky asset = more fear = fewer investors = price goes down.

It seems to be stable at 20.000 until FTX. Panic sells thier BTC. There is still fear that BTC will fall because the contagion as they call it is still there. If it doesn't fall despite the next domino falling, I guess no one sells anymore but just those fraction that we see right now. Been observing for hours the biggest I saw on the orders was 0.5BTC.

Actually this a normal phenomenon you will see during the price breaks. If you see in past whenever btc price falls, traders do withdraw their coins in private wallets many people even trade based on this data using cryptoquants. But I think so far the sample space for this data is pretty low. I have seen many times this metric of Bitcoin exchange reserve ratio falls and yet price keeps on falling as well. So not very sure if this is the right indicator to judge or not.

bitcoin might have a 19m limited supply this year. but those 19m are not on exchanges

lets say 4million are
exchanges might have limited supply of 4m but not all of those are on active market orders

lets say 2m are (binance only 400k btc in custody and has les on market orders)
market orders might have long order books of XXXk btc. but the price is only based on the current decimal amount of btc being sold at any specific time

yep thats right the market price is only based on the decimal amount of btc being sold at a given time

people are not depositing $16k to buy a whole BTC (like they have to to buy whole fiat company shares). people can buy small allotment of decimals using lower fiat amounts

exchanges can trad 0.0001 for $1.60  and the market price still calcuates to being $16k for 1btc

so even without much "supply" in an exchange. market makers just swap less decimals.

in 2012 the buyers depositing $400 and could get 66btc
in 2022 same person does not deposit 2500 x $400 to buy 66btc
investor still puts in his regular $400 and only gets 0.025btc

we seen in 2012 that walls (large orders that didnt fulfil) were 1000btc thick. now they are 1btc thick

..
though in 2012 the entire bitcoin network coin circulation supply was 11m coins
and now its 19m coins (more supply)
the market supply on active orders went
from  1-1000btc per order line
to 0.001-1btc per order line

Storing funds in the exchange has never been safe, and it will never be safe. In that case, we can simply learn from the past experience. The cause is collapse. Bitcoin is only for panicking. When something awful happens in the crypto space, people panic and begin selling. You can see the issue with Luna, which has crashed the entire crypto market, as well as the issue with FTX, which has also crashed the entire crypto market. In such cases, people seem to prefer to liquidate their cryptocurrency. As a result, there would be a massive sell, which led to a massive dump.

I don't think your getting this right.
The supply of bitcoin have got no effect on what is happening in the market today. Not except your looking at it from the part of demand and supply where, you've got an inverse action depending on what constraints is in play. I don't know if you are following up OK OK am implying but, am rather talking about the total supply of some BTC21million. That is hardly called limited nor have effects to the reset surge and bear moves as, its always remained fixed that way.

The drastic moves you see of recent is largely traced to the issues of FTX. People having to realise that the phrase, "not your keys and not your coins"is for real and the dangers in having so much coins stored away on an exchange and a centralized exchange at that. People finally arr trying to play it safe.

AFAIK when exchanges becomes lack of supply of bitcoin, they're doing something about it like announcing it and there's lesser amount for the minimum withdrawal just like what happened for some exchange last bull run.

That's mostly the case but it could also be that everyone is withdrawing their asset from "A" exchange to "B" exchange just because of their worry and they trust more where they've transferred it.

I don't agree here and you've actually contradicted the first part of your post with the second one. If according to you less liquidity means more volatility and more volatility means lower price then the amount of coins on exchanges does matter.

I'll add that less coins on exchanges is always good. Think of it like this:
More coins available for sale > bigger sell walls > more fiat needed to break into higher prices
Less coins > much easier and more frequent short squeezes > higher possibility of price manipulation but also higher and more frequent pumps, wider price ranges.

IMO more coins outside exchanges is good because it suggest more people self custody and as a result less coins being possibly lost or stolen. It's also better for traders because they're the ones that love volatility. I'm not a trader and I don't care if the price range is wider and btc goes up and down by 100% in a year. I've seen it in 2017, 18 and 19 and was fine with it. I kind of miss it now.

Orders of 0.5btc are quite large for one trade. But in the environment that we are in right now, this isn't so surprising.
People want to get their bitcoin and any others coins off exchanges immediately from actions of the past week.
There is even a PSA on the top of the forums put up due to these series of events that wasn't there the last time I was on here at the beginning of the week.
Which exchange might I ask were you referring to with these sort of orders totaling 0.5btc per trade? They must be a regulated one because non-KYC exchanges have probably limited their withdrawal amounts from those events occurring.

If a coin is on exchange but not in orders, it has zero affect on the price. Even if a coin is in sell order, it's not the biggest factor that decides the price. And any coin that is out of exchange can be deposited in 10 minutes, so thousands of bitcoins could be dumped on the market before you blink.

So, people taking their coins out of exchanges won't necessarily cause a bull run. A bull run in Bitcoin generally happens when there's a surge of demand, not when there's a drop in supply.

Wouldn't that mean that people are actually trying to save if a huge portion of coins in centralized exchangers are moved our from it? Also, that doesn't make much difference. Coins sitting in alexchange wallets not being sold doesn't affect liquidity, so the net change in an exchange's trading volume and overall liquidty is very minimal. Lots of coins are being kept in exchanges but not everything is traded.

It's great that people are withdrawing. I know it's mostly caused by fear instead of awareness like it should be but better late then never.

It won't cause a bull run but it won't cause a breakdown either. It may also start a pump because with less coins on exchanges volatility goes up. A pump like that is followed by new deposits of people who wanted to sell but held on their wallets and the res a correction but that's all normal.

The market now is far from normal everything is oversold and there's too much panic we could use a relief rally.

It's a possible scenario and I would do the same if I were them.  Now they've realized that storing on exchange isn't safe at all and even CZ told to people to store their crypto on Trustwallet which I think made them panic and transfer their funds to an open-source wallet with which they have full control.  The awareness has been spread and it's better for those people new to the crypto space to learn how to keep safe their crypto.

Those people who didn't know how to store their funds correctly and still confuse about what to do are usually tempted to sell their Bitcoin, which means more sell orders become more coins available for sale.  It could have an effect but this will not long last, Bitcoin will recover no matter what.

Limited supply is not correlated with with withdrawals from exchanges. How did you connect them?

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In addition, fear of holder selling causes withdrawals from exchanges, that is another bad connection. People are panic to withdraw their bitcoins and cryptocurrencies from centralized exchanges because they are fearful that other exchanges will go bankruptcy like FTX, Gemine, Genesis, Blockfi.

People are losing their vulnerable belief in blockchain technology and cryptocurrency market but I would like to remind

"Be fearful when others are greedy and greedy when others are fearful." - Warren Buffet.

It's the time, simply reminder.

dont be so quick to judge about that. some are actually still involved in crypto, they just want regulation of the edge businesses/gateways at the sidelines of crypto

take kevin o'leary(shark tank fame) who was highly invested in FTX
https://www.youtube.com/watch?v=BxEFYqbOchc

Actually I believe that is the exact opposite. Meaning when people pull their money (both fiat and bitcoin) out of exchanges it means there is less open orders on those exchanges too. The result of a "thin" orderbook is a more volatile market.

You can compare bitcoin market with a small shitcoin market and see how the small one is more volatile to understand what the order books and low number of orders (both buy and sell) means for its volatility.

in 2012 there were only 11m coins on the entire network
yet 1mill coins on just mtgox alone
market orders ranged from 1btc-1000btc average

in 2022 there are 19m coins on the entire network
yet 0.5mill coins on binance alone
market orders ranged from 0.001btc-1btc average

there are less coins per marker order in comparison to 2012 even though there are more coins circulating on the network. yet the markets are stronger in ways of volume and trade

the price is not measured by how many coins are in circulation matching how much fiat is in circulation.

the price is matched by someone buying 0.0001 for $1.60 which. by simple maths evaluates bitcoin to be $16,000/btc

bitcoin always have bad social media news peroids.. these times test the lows of each period and see where the strangle point is where .. and i say this.. not where everyone gives up and bitcoin dies.. but where sellers say no more and stop selling. thus having a non-zero bottom where no one sells below

this value level of support this year has been $15k for a long part of 2022.. and even in these bad news days. that point is being tested.. and guess what.. it remains.

we have not seen a massive 50% mining hashrate loss. or a 50% loss below the value support of $15k

by the way even before all this socia drama bad news stuff of bad business practice.. where prices were over $20k
there was still an underlying value line based on not markets. but mining cost that supported a $15k non-zero line

and now we see the markets testing that line
the more times its tested the better. the more it doesnt break the better

it then goes to prove the $15k line is a good support of a non-zero bottom. people gain confidence again and the markets rise

Again. You are looking at supply site of equation only. There is also a demand site.  People are not only withdrawing bitcoin but fiats too. So there are smaller sell walls but also less money to buy them.


But traders like volatility that is predictable. Not random flash crash that whipe out stoploss orders and leveraged positions. I remember an interview with market operator that I was watching 3-4 years ago. Guy from big found said something like that - "If you want people to buy, create nice looking chart for them that fallows all rules, supports, trend lines. Make it a good place to draw lines and do technical analysis"


Thats indeed a positive thing. Another one, even more imporatant, is less coins being a collateral in fractional reserve - https://bitcointalk.org/index.php?topic=5094088.msg49096584#msg49096584

It seems that the current situation is starting to make people panic and take steps because of the things they are afraid of coming to dispose of them. Unfortunately, after this confirmation, we still haven't found the drop point. Do we need to watch out for this? Because based on the confirmed timeframes, we have yet to see a market response to the impact of such large shipments to exchanges.
https://i.ibb.co/GpSyDh4/image.png    https://i.ibb.co/G9mZfzh/image.png

https://whale-alert.io/transaction/bitcoin/0278254aa0d98a52c01da470e2cd859f004a9209829946c7fa869985d84d7cd7
https://i.ibb.co/dtVx7Cm/image.png

I would add also that BTC is just a small portion of exchanges daily transactions, it's been long since I saw it in top 10 of Binance daily volume, in fact I don't think I even remember it at all this year.

And that just shows how much Bitcoin to me is really on the site, not so much because people aren't selling or buying but there are way too many pairs of other non BTC sets trading.

And when there is a run on deposits, for sure it is the same case that non-BTC currencies are being withdrawn, so agree, less money to buy BTC too.

The point is about market manipulation. A market with tightly packed order books that costs a million to cause a 0.1% change is a lot harder to manipulate compared to a market with thinly packed order books that costs a grand to cause a 10% change.

In your comparison with 2012 you forget another important factor which is the number of exchanges and their share of the market. In 2012 more than 85% of the volume was found on only one exchange called MtGox but today the biggest exchange can barely reach 10% of the total market volume.

You are wrong because mining cost changes based on price not the other way around. It also is decided based on regional effects. For example home miners here that are mining bitcoin at a $0.002 per KWH have a far less mining cost than those mining bitcoin at $0.1 per KWH elsewhere. In other words the line you imagine does not exist.

Yeah! right, they were caught red-handed when they did that and they are now suffering for the things they did. It's really hard to trust exchanges after this because they are not just like any other common exchanges because they are one of the biggest ones but they also failed to stay as positive and good as possible because their real colors have shown and the only people who are lucky are those who withdraw their funds just before the disaster hits FTX.

There is no possibility for shortage of bitcoin, because bitcoin supply is limited so users who deposited the funds to exchange should have the exact amount of bitcoins in their wallets so the deposit and withdraw should be tallied or else the exchange is involved in some how with shady activities.

Only hack on the exchange will result into the shortage for them and it if happens then probably the exchange will announce it publicly, traders can't trade via wallets so when we say trader they have to use the exchange for trading.

How do you know that exchanges have a limited supply of BTC, when not all of them have shown us their proof-of-reserves?

And not only that, but it's displayed as a snapshot anyway, so it's possible an exchange claims they're liquid with a proof-of-reserves audit but right now they have much less reserves.

Bitcoins are limited in supply and hence it is very valuable. I do agree on the fact that, we should store and hold it as long as we can, but there are some necessities come when people are forced to withdraw their money, so hence their streak of holding the currency breaks and they sell the coins that they are holding. The whole point of the post is to make people understand that, Bitcoins are limited , so when the demand of the coins will increase, the price will go high. So it’s not best to panic sell the coins.