After comparing the order flow from Coinbase and Binance for the BTCUSD pair, I鈥檝e noticed that Coinbase has a much greater ratio of green rejection candles (candle closing green despite more selling volume) than Binance. There are many reasons that could explain the difference but one likely reason is that Coinbase sees more institutional volume while Binance sees more retail volume. Nothing surprising since BlackRock, #Saylor and other institutions have made Coinbase their home.
However, it appears that green rejection candles could also correlate with a stronger presence of asset lending for short selling. This is especially likely if buyers are strong enough to absorb the sell pressure or if lenders and buyers are the same entities. Obviously, institutional players could play this role.
There had been a lot of debate about this #Bitcoin cycle and why the dynamic of this cycle seems different. Indeed, so far we haven鈥檛 seen the type of parabolic price action that we鈥檝e seen in previous cycles. Instead, #BTC has been rising in a channel with long periods of sideway consolidation. It鈥檚 difficult if not impossible to pinpoint what causes this change in character but my intuition tells me that Bitcoin lending activities conducted on Coinbase has a major influence. Coinbase lends BTC to institutional players who used the borrowed bitcoins to cap the price at given the levels creating multi months ranges where BTCs sold at the top are bought back at the bottom. Institutions are accumulating while retail witness diminishing returns on their BTC holdings.
The power of Bitcoin to challenge the banking system is in its self-custody and auditability properties. The more people use centralized exchanges, or invest in ETF, the less threatening these properties become to the system. Coinbase is the worst of all as it hosts most of the institutional money and it鈥檚 the only major exchange that doesn鈥檛 provide provide proof-of-reserve. Coinbase and entities using them as their custodian, such as Startegy, should not be supported.
While many think that the growing presence of institutions to Bitcoin is a good thing for the price (most would agree it鈥檚 not positive for the culture), I think it may actually be the opposite. Institutions get involved with Bitcoin under their rules which allows they same type of trickeries that take place in the fiat World. Unfortunately, it鈥檚 not an easy trend to reverse as a lot of money is favoring bitcoins packaged the tradefi way.
All of this makes me wonder if Bitcoin will ever see the type of price action that has been seen in past cycles. Maybe Bitcoin got eaten by tradefi and there isn鈥檛 much that can be done (besides educating newcomers). That鈥檚 also the reason why I think #Monero has a fair shot at outperforming Bitcoin (price-wise) over the coming years. The delisting from exchanges are short term pains for long term gains. It removes the ability from centralized entities to suppress its price and frankly the institutions don鈥檛 want to have anything to do with #XMR.
#Trading #Tradestr
