Author: Daii Source: mirror

Bitcoin has been fluctuating around US$96,000, at 95,000 It seems that there is relatively strong support around the US dollar.

This was also confirmed yesterday. When the US January inflation data exceeded expectations, Bitcoin once fell below 95,000. Today, we have returned to the fluctuation of 97,000, which is enough to show that the support of 95,000 is resilient enough.

Further, Crypto Quant data shows that at present, the Bitcoin reserves of all cryptocurrency exchanges around the world have dropped to 2.5 million (see the figure below), creating a The lowest point in three years. Analysts believe that this change indicates a potential "supply shock" coming, and Bitcoin's price will rise sharply.

So, can the "supply shock" actually make the price rise back? My answer may disappoint you. I thought:

Even if there is a "supply shock", the price of Bitcoin may fall.

Why is this? Because of the black hand.

1. The supply shock is coming, and prices are still falling?

The so-called "supply shock" refers to the sharp decline in the number of tradable Bitcoins in the market, while strong demand has led to violent price fluctuations. But the outcome of this phenomenon is not a single direction:

Bulsive logic: illiquid Bitcoin (i.e., long-term dormant BTC) accounts for as high as 73% (1540 ) while miners only add about 900 new pieces per day. If institutions continue to absorb funds at the current rate (such as ETFs with an average daily net inflow of 23,000 BTC), the exchange reserves will be exhausted within more than 100 days. Historical data shows that for every 1% increase in illiquid supply, Bitcoin’s average annual return rate increases by 3.2%. Illegal supply, i.e. long-term holding or locking in untradeable Bitcoin.

Bearly concerns: Long-term holders (LTH) may become"Supply bombs." After the halving in 2024, LTH has released 1.58 million BTC to the market. If 1.4 million more were sold in 2025 (56% of the current exchange reserves), the liquidity crisis will reverse into a sell-off wave. In addition, the recent net outflow of US spot ETFs of US$186 million in a single-day manner, indicating that institutional funds are not solid.

If you don't understand yet, you can look at the picture below again and pay attention to the accelerated outflow indicated by the red arrow.

Bitcoin has been accelerating its outflow from centralization due to Trump's election as president Exchange. From early November 2024 to now, more than 360,000 Bitcoins have left the exchange. However, do you still remember that Bitcoin fell below 92,000 on February 3?

You may be thinking, since the supply and demand relationship cannot determine the price of Bitcoin, then who sets the price of this Bitcoin?

2. Who can decide the price of Bitcoin?

Centralized exchange (CEX) is the pricer of Bitcoin. This is ridiculous and dangerous, but there is no way, we can only accept it.

In 2009, programmer Laszlo exchanged 10,000 Bitcoins for two pizza vouchers, completing the first over-the-counter transaction in Bitcoin history. At that time, price was just a coincidence between two individuals. But in the following decade, the birth of centralized exchanges completely changed this situation.

In 2010, the first Bitcoin exchange Bitcoin Market was launched, and users began to buy and sell Bitcoin through centralized order matching. In 2014, Mt.Gox went bankrupt due to hacking, but it also made the market realize the need for liquidity concentration. By 2023, Binance alone accounted for 64% of the crypto derivatives market, and the top ten CEXs monopolized 92.2% of the trading volume in the spot market.

The rise of CEX is essentially an aggregation of capital, technology and human needs: they gather scattered trading needs into massive order books, through millisecond matching Engine, converting price fluctuations into global unified digital signals.

CEX'sPricing power comes from three major support: high liquidity, legal currency entry advantages and market inertia.

2.1 High liquidity: the decisive force of prices.

High liquidity means the efficiency of price discovery: When a large order enters Binance's order book, the market can quickly digest and form a new equilibrium price, and DEX may cause slippage up to several percentage points due to insufficient liquidity pool.

2.2 Franchise currency entrance: a bridge connecting reality with the chain

CEX is the first stop for ordinary people to enter the crypto world. Users can directly purchase Bitcoin through credit cards, bank cards, etc., and this process relies entirely on CEX's centralized custody system (or OTC). This seamless conversion of "fiat currency-cryptocurrency" makes CEX the core channel for capital inflows, thus occupying a great advantage in customer acquisition.

2.3 Market Inertia: Self-reinforcement of price signals

When the DeFi protocol requires liquidation of collateral or generating on-chain prices, more than 90% of projects still rely on the CEX API data. For example, lending platforms such as Compound decide whether to trigger closing positions through the price feed of Binance and Coinbase.

In this way, CEX has the pricing "privileges" of the crypto world. However, sadly, such privileges are completely unsupervised, and manipulating prices and making profits has become a business that CEX can make sure to make profits.

3. CEX inserts a "needle" to harvest leverage users

Centralized exchanges (CEX) manipulate prices to harvest leverage traders. This is not an urban legend, but an industry The secrets disclosed in the interior are only due to the lack of supervision and are rarely exposed. CEX has the control of user funds and transaction data and has a natural advantage in doing evil. They are like hunters lurking in the dark, waiting to harvest traders who bet on high leverage.

Imagine a young trader named "Xiao Li" who is confident in the prospects of Bitcoin. He has studied various technical indicators and firmly believes that Bitcoin is about to break the $100,000 mark. So he opened a long order with a 10x leverage on a CEX and invested most of his savings as margin.

At first, everything was as Xiao Li expected, the price of Bitcoin rose steadily and his account profits continued to increase. He began to look forward to a bright future, as if the door to wealth and freedom had been opened to him.

However, good times don't last long. One day, a strange "needle" suddenly appeared on CEX. In just a few minutes, the price of Bitcoin fell sharply, instantly falling below Xiao Li's liquidation line. When he opened the trading software in panic, he found that his long order had been forced to close and the margin in his account disappeared without a trace.

Xiao Li was in tears. He could not understand why the market suddenly experienced such violent fluctuations. He began to wonder if he had made a mistake in his judgment or encountered the "black swan" event.

But the truth is far more cruel than he thought. He may not know that this "needle" is the result of CEX's price manipulation.

CEX can create this "needle" in a variety of ways. The most commonly used and hidden method is "fixed-point blasting". CEX can identify traders who have heavy positions on high leverage by analyzing users' trading data. They can then plunder their margin by controlling the price, accurately exploding these traders’ positions.

Please pay attention to the figure below. According to Coinglass statistics, if the price of Bitcoin is inserted into "pin" below 93408 again in the future. Then, by then, positions close to $1.5 billion will be liquidated, and users of these leveraged trades will lose their margin forever. If we calculate it at 25 times the leverage, it would also be a huge sum of $60 million.

Considering that Bitcoin was once inserted into "needle" to 9.2 on February 3 It is not impossible to fall below $94,000 again. The point is that CEX's pinning behavior is still difficult to detect because they can disguise price manipulation as normal market volatility.

So, how did they do it specifically?

4. How does CEX manipulate prices?

CEX operation method is also very simple - Wash Trade.

Wash Trade, also known as false transactions or self-transactions, refers to the fact that traders act as buyers and sellers in the same exchange, artificially creating transaction volumes. and price fluctuations. The purpose of this operation is to misleadOther market participants make them believe that a certain cryptocurrency has higher liquidity and demand, which will attract more people to enter and ultimately raise prices or profit from them.

Of course, more often CEX will conspire with the main force (market maker) to make the depth of the pin more than you imagine. Recently, suppressing Bitcoin to less than 92,000 is a successful leverage (tax war) plug-in. For details, you can take a look at "Bitcoin fell below 92,000. Is it the end of a bull market or a short trap? 》.

As Wash Trade seriously disrupts market order, many and regional regulators are strengthening supervision of cryptocurrency exchanges to crack down on false trading. However, centralized exchanges (CEXs) have never given up their privileges on "price manipulation". However, due to the lack of effective supervision of CEX, it is rarely caught. So far, the only one caught in the current situation is Mt.Gox.

About how Mt.Gox manipulates prices, there is a detailed analysis in my article "Don't be considered "true" in Bitcoin". Today, although the supervision of CEX has been strengthened, CEX is essentially still unregulated, and Wash Trade has always existed. The only thing you can do is control your leverage and not become a victim of CEX price manipulation.

Conclusion: Survival strategy of Dark Forest

I have always said that predicting the price rise and fall of Bitcoin in the short term is no different from guessing the positive and negative side of the coin, whether it is guessing the rise or There is a 50% chance of falling. Today you should understand that because of the existence of CEX, such speculation has lost its meaning.

The game in the Bitcoin market has long surpassed the simple supply and demand curve. Exchange reserves fell to three-year lows, and the "supply shock" narrative seems to pave the way for a bull market, but CEX's underbox operation is like the sword of Damocles hanging overhead - it can create both the panic of liquidity exhaustion, It can pierce the bubble of carnival with a "needle" in an instant.

History has repeatedly proved that the combination of centralized power and financial markets is destined to breed a secret harvest game. From the fake trading of Mt.Gox to the current exchange's "fixed-point explosion", the distortion of the price signal has never stopped. For ordinary investors, rather than tangling short-term ups and downs, it is better to see the essence of this game: in a dark forest without regulation, CEX is both a referee and a hunter.

The real risk is not price fluctuations themselves, but the collective unconsciousness of the monopoly of pricing power. Perhaps, only when decentralized transactions completely break the liquidity hegemony of CEX, and when on-chain prices find it truly independent of the centralized order book Only when Bitcoin can truly realize the freedom of pricing of "digital gold".

Before this, we should be alert to every seemingly reasonable market signal, because your opponent is not someone else but CEX.

In fact, controlling one's own desires is the fundamental solution to all problems. I hope these two articles can help you, one about cognition and the other about strategy, so that you can learn more about the survival knowledge of dark forests.

From today, add the following "Brief" to tell you the information that I think is important in the form of a briefing.

Brief

Cathie Wood, founder and CEO of ARK Invest. Recently, she said in a video that the price of Bitcoin could reach $1.5 million by 2030. Her reason is that institutional investors will become an important part of asset allocation because of Bitcoin’s unique risk and return characteristics.

The Trump family, through its blockchain platform World Liberty Financial (WLFI), recently launched a new strategic fund—" Macro Strategy" Fund aims to support the growth of Bitcoin, Ethereum and other cryptocurrencies. Hopefully this is not the Leek Harvest 2.0 plan. It seems that Ethereum is also becoming a new consensus among institutions.

VanEck Asset Management Company, recently released an analysis report stating that several states in the United States are discussing bills to create Bitcoin reserves. If these bills pass, they will May drive up to $23 billion in demand for Bitcoin. VanEck analyzed the Bitcoin Reserves Acts in 20 states and found that if these bills come into effect, states would need to buy approximately 247,000 bitcoins.

Cboe BZX Exchange submitted a proposal to the SEC to allow 21Shares Core Ethereum Exchange Traded Fund (ETF) to be staking on Ethereum. Once approved, the ETH ETF will also become an optionThe asset class that generates interest may trigger an investment boom in ETH ETFs.

The New York Times says TRUMP meme coin investors suffer huge losses. According to blockchain intelligence company Chainalysis, at least 813,000 crypto wallets lost a total of $2 billion in purchases of TRUMP. Hester Peirce, a member of the Securities and Exchange Commission, said they don't care about meme coins. It seems that this year's United States will not be in charge, will Congress take charge?