The recent continued decline in the cryptocurrency market has raised many investors' questions: Who is actually selling?

1️⃣ Market decline and selling phenomenon: Although Bitcoin ETFs and institutional investors have shown buying interest, the market continues to decline, showing that more complex market factors are at work.

2️⃣ Selling by old holders: The main sellers are old investors (OGs) who have held Bitcoin for a long time. The amount of Bitcoin in their hands far exceeds the sum of all ETFs, sometimes even several times that. During the bull market, old holders usually sell part of Bitcoin to make a profit.

3️⃣ The impact of paper Bitcoin: Traditionally, buying Bitcoin means buying actual Bitcoin. However, now, investors can choose to buy paper Bitcoin, that is, financial derivatives that are not backed by actual Bitcoin. This situation has led to the emergence of so-called synthetic Bitcoin in the market, provided by traders who are not backed by actual Bitcoin and rely solely on the US dollar to support their transactions.

4️⃣ Market focus: The 2022 bear market is largely driven by a large increase in paper Bitcoin, while investors who actually hold Bitcoin have not sold it on a large scale. In the current bull market, the rise of paper Bitcoin is in stark contrast to the stagnation of the actual Bitcoin price.

5️⃣ Importance of comprehensive analysis: Investors cannot just focus on ETF purchases. On-chain data, derivatives market data, and price technical indicators are all important tools for assessing market supply and demand. Combining this information for analysis is an art, not just a simple quantitative science.

Alan Knitowski proposed that the concept of Bitcoin's supply cap of 21 million is gradually losing importance because the ability to short Bitcoin with US dollar collateral is limited. This explains why the SEC tends to support futures ETFs rather than physical ETFs, which also reflects an ongoing regulatory debate.

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