The crypto market keeps falling, who is selling?

1. Market decline and selling

In the current Bitcoin market, the market keeps falling even though ETFs and institutional investors are buying. So, who is selling?

2. OG selling

First, let's see who is selling. The answer is OG (old-time holders). They are selling and have more BTC than all ETFs combined, even 10 times more. In every bull market, OGs sell part of their BTC. We are now in the modern era of BTC, and paper BTC (futures market) has flooded the market since 2017

3. The impact of paper BTC

If you want to buy BTC, you used to have to buy real BTC, but now you can buy paper BTC. Therefore, people without coins can sell you paper BTC, creating a synthetic BTC together. The potential demand for BTC is transferred to paper BTC, which is met by OTC traders who have no BTC to sell and only have US dollars to support their bets.

In the past, BTC would have grown exponentially because the only sellers were the trickle from OGs and the smaller number of newly mined coins from miners. Today, the magic of paper BTC is what you want to focus on.

4. Focus

The 2022 bear market was determined by the massive influx of paper BTC when spot holders didn't really sell. In the current bull market, I marked where paper BTC rose, and these were when the price didn't rise. We are in one of them now.

So, it's not a good idea to focus only on ETF purchases. On-chain data, derivatives data, price technical indicators, all add to the demand and supply situation. Putting them together is an art, not a quantifiable science. Everyone is just making educated guesses.

Alan Knitowski pointed out that the importance of Bitcoin's supply cap of 21 million is waning. There is limited firepower to short BTC with US dollar collateral. Now you understand why Biden's SEC wants to enable futures ETFs and block spot ETFs. This is a war going on.

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