A crypto analyst claims that Bitcoin (BTC) held or staked on exchanges has been sold. Binance answers questions on the topic…
Rufas Kamau thinks exchanges are selling Bitcoin
Security breaches and attacks often highlight the risks of storing Bitcoin (BTC) on centralized exchanges. One analyst even claims that keeping your BTC on exchanges is also a factor for price drops. Rufas Kamau, research and market analyst at Scope Markets Kenya, shared his thoughts on how holding BTC on an exchange lowers its price. Kamau believes that buying BTC on exchanges simply means buying “I Owe You” (IOU), which he describes as “paper Bitcoin”.
If you buy Bitcoin and keep it at the exchange, you are net short, you are contributing to the price of Bitcoin going down, even if your goal is higher prices.
Here's why:
Listen to me pleb, this is important.
1/n— Rufas Kamau ⚡ (@RufasKe) May 8, 2022
The analyst also noted that exchanges like to withdraw BTC, such as high withdrawal fees. He points out that he has created many ways to deter. On the other hand, exchanges encourage BTC to stay on exchanges by offering staking services. According to Kamau, this is done because exchanges can sell Bitcoin held on exchanges to other buyers, while the owner of the Bitcoin IOU is happy to get an annual percentage return on their BTC.
“Stay away from exchanges”
Due to this process, Kamau argues that investors who buy and hold BTC on exchanges, the process allows exchanges to “print” Bitcoin and the price increases as supply increases. He claims he suffered a deficit because he fell. It also urges users to stay away from exchanges:
The sensible thing to do if you want to change the world with Bitcoin.
Although many people liked and retweeted Kamau’s post on Twitter, not everyone agreed with his comments. Twitter user Koning_Marc responded to Kamau by saying his message was “wild speculation at best.” Additionally, Twitter user Felipe Encinas replied that in this case, exchanges can short sell without owning BTC. Encinas said “it can’t be”.
Crypto exchanges do not deny that this can happen on some exchanges
But LBank President Eric He said a lesson will be taught to exchanges that do this:
Market, It will teach exchanges that sell users’ Bitcoin a lesson because they will not be able to get back the Bitcoin they sell. Exchanges like this will definitely fail.
He also explained that the currently thriving and expanding cryptocurrency exchanges are “solid crypto believers.” Those who believe that BTC can hit $100,000 and therefore buy BTC instead of doing dark things like selling other people’s Bitcoins.
Binance focused on the issue. A Binance spokesperson said in a statement that exchanges are not authorized to move users’ funds without permission. They said they did not take positions at their companies and that “users’ crypto assets are securely stored and stored in offline, cold storages held on the exchange.”
