To answer the question: can BTC really be a safe haven? we'll have to find out what is the problem that keeps it far away from being one?
In my opinion, this is VOLATILITY. So what forces BTC to make such large price movements?
It turns out that the biggest problem is the extreme leverage on cryptocurrency markets, which are offered by unregulated offshore exchanges.
BTC is highly concentrated and data show that almost 95% of BTC resources belong to a relatively small number of addresses. Such conditions give the market a 'kick' and increase greed.
At the same time, many traders who are using highly leveraged trading platforms have a very high-risk appetite and not always the skills needed to play with 100 or 200X leveraged trades.
BTC ADDRESSES % COINS USD %COINS
https://bithub.pl/wiadomosci/bitcoin-na-lasce-algorytmow-dlaczego-btc-i-safe-haven-to-na-razie-zwykla-mrzonka/
Most exchanges that offer trading with very high leverage were not designed to handle not only the large-scale volumes in times of heavy market congestion but also the network traffic itself.
The problem of overloading exchange servers has become very common in the last two years. It is ironic that such things happen, of course, at times when markets tend to increase their trading volume drastically. This is a big problem as we have seen lately because it makes difficult for traders to reduce their exposure, when such an event occurs, leaving them at the mercy of aggressive liquidation algorithms.
We have to remember that regulated exchanges only offer around 3.5 times leverage.
Crypto exchange insurance funds act both as an external picture of the exchange's success, but also as a measure of how aggressive and harmful their liquidation algorithms are for the traders. This is because on almost every crypto exchange the insurance fund is capitalized from the liquidation of traders' positions.
100x leverage and higher 200X is attractive (at least at first glance) for a trader who wants to maximize profits with a minimum contribution of his own capital, but it causes this insane volatility that prevents the profitable use of such high leverage. If the plug by Bitmex would not be pulled out on time BTC price would fell to 0$. How could this happen? Isn't this still too early for such high leverage 100 or 200X in the crypto market?
https://hacked.com/bitcoins-price-recovery-stalls-as-bitmex-shuts-down-u-s-accounts/
In my opinion, only because of this Bitmex incident it would be wise to limit the widely available throughout the ecosystem high leverage to stop this absurd volatility.
Source: https://bithub.pl/wiadomosci/bitcoin-na-lasce-algorytmow-dlaczego-btc-i-safe-haven-to-na-razie-zwykla-mrzonka/
In my opinion, this is VOLATILITY. So what forces BTC to make such large price movements?
It turns out that the biggest problem is the extreme leverage on cryptocurrency markets, which are offered by unregulated offshore exchanges.
BTC is highly concentrated and data show that almost 95% of BTC resources belong to a relatively small number of addresses. Such conditions give the market a 'kick' and increase greed.
At the same time, many traders who are using highly leveraged trading platforms have a very high-risk appetite and not always the skills needed to play with 100 or 200X leveraged trades.
BTC ADDRESSES % COINS USD %COINS
https://bithub.pl/wiadomosci/bitcoin-na-lasce-algorytmow-dlaczego-btc-i-safe-haven-to-na-razie-zwykla-mrzonka/
Most exchanges that offer trading with very high leverage were not designed to handle not only the large-scale volumes in times of heavy market congestion but also the network traffic itself.
The problem of overloading exchange servers has become very common in the last two years. It is ironic that such things happen, of course, at times when markets tend to increase their trading volume drastically. This is a big problem as we have seen lately because it makes difficult for traders to reduce their exposure, when such an event occurs, leaving them at the mercy of aggressive liquidation algorithms.
We have to remember that regulated exchanges only offer around 3.5 times leverage.
Crypto exchange insurance funds act both as an external picture of the exchange's success, but also as a measure of how aggressive and harmful their liquidation algorithms are for the traders. This is because on almost every crypto exchange the insurance fund is capitalized from the liquidation of traders' positions.
100x leverage and higher 200X is attractive (at least at first glance) for a trader who wants to maximize profits with a minimum contribution of his own capital, but it causes this insane volatility that prevents the profitable use of such high leverage. If the plug by Bitmex would not be pulled out on time BTC price would fell to 0$. How could this happen? Isn't this still too early for such high leverage 100 or 200X in the crypto market?
https://hacked.com/bitcoins-price-recovery-stalls-as-bitmex-shuts-down-u-s-accounts/
In my opinion, only because of this Bitmex incident it would be wise to limit the widely available throughout the ecosystem high leverage to stop this absurd volatility.
Quote
Until the crypto exchanges attempt to solve this problem, bitcoin will not free itself from the framework of being a spinning toy towards a resource of true interest for traditional market players.
https://bithub.pl/wiadomosci/bitcoin-na-lasce-algorytmow-dlaczego-btc-i-safe-haven-to-na-razie-zwykla-mrzonka/Source: https://bithub.pl/wiadomosci/bitcoin-na-lasce-algorytmow-dlaczego-btc-i-safe-haven-to-na-razie-zwykla-mrzonka/