Binance Naked-Shorting & Celsius Manipulation of Bitcoin Cash
*The article was corrected (April 28th, 2021).
As a continuation of this article: "A Bitcoin Cash ($BCH) Chart Investors Should Not Miss" where I explained the similarities of the Bitcoin Cash chart between 2020-2022 and 2013-2015, today we notice an extensive decline in the price of BCH slightly more aggressive than BTC was between 2013-2015.
We observe an excessive price-stretch especially in the Binance perpetual futures market where price declines more violently than any trading pair on any exchange, perhaps due to massive speculation.
While shorting is appropriate in free markets, the practice of naked shorting is unacceptable and illegal almost everywhere since it creates an artificial supply.
While perpetual futures do not constitute naked shorting, since the underlying assets are not delivered, we still witness the exchange blocking withdrawals for Bitcoin Cash, which indicates a lack of reserves on this asset.
Selling assets that don't actually exist creates artificial supply and implies a fractional reserves method that severely undermines the price of BCH.
Exchanges Are Selling Bitcoin Cash that Does Not Exist
Naked shorting stands for the behavior when a trading room sells Bitcoin Cash that doesn't exist.
How does Binance relate to this activity?
It is the top exchange in the cryptocurrency field in terms of trading volumes
In November 2021, Binance suspended Bitcoin Cash withdrawals for days without announcing a reason. The exchange didn't control enough Bitcoin Cash to cover the sales it produced. (Withdrawals were again
Binance, in November 2021, also suspended Dogecoin withdrawals for more than ten days, however, it appears there was a technical reason with a Dogecoin update that created massive issues to the exchange (Dogecoin Core 1.14.5).
Binance stopped BCH withdrawals since it did not have access to enough Bitcoin Cash to cover the demand. It kept allowing shorts with Bitcoin Cash but could not cover these shorts with actual BCH.
To put it simply, Binance is selling Bitcoin Cash that doesn't exist, and suppressing the price while the perpetual future market extends the dip even further.
The price action of Bitcoin Cash often makes no sense, especially the daily candles for these dates on the futures market.
May 19, 2021: (-69% from daily high to low)!
June 21-22, 2021: (-30% from daily high to low)
Sep. 7th, 2021: (-28% from daily high to low)
Oct, 27th, 2021: (-10% daily change)
Nov, 16th, 2021: (-10% daily)
December 4th, 2021: (-36% from daily high to low)
Jan. 21 & 22, 2022: (-28% from daily high to low)
Jan 24, 2022: (-14% from daily high to low)
Apr, 6 2022: (-10% at daily close)
Apr, 11 2022: (-8% daily)
This chart is the futures market of BCHUSD on Binance.
Binance
All the candles are stretched to the bottom during volatile dips the whole market suffered.
Bitcoin Cash was stretched in Binance futures at lower than spot market prices by 20-50%.
Especially on May 19, 2021, Bitcoin Cash in Binance Futures exchange dropped in just one day from a high price of $1112, all the way down to $324.
This is a 70% decline in the futures market in just a single day.
In the spot market, we don't know how much Bitcoin Cash Binance actually holds as reserves. However the charts together with the suspension of withdrawals, present a realistic case that BCH's artificial supply is multiple times higher than its actual supply.
There is no transparency here, and Binance could be simply printing numbers and adding supply creating manufactured price pressure on the spot market and further enhancing short trading in the futures market
Even a quick peek at the Binance futures chart perfectly explains how this market operates with massive shorts unbalancing the price of Bitcoin Cash on numerous occasions, especially when Bitcoin Cash seems able to present a bullish case.
Binance covers a percentage (probably a small one) of the BCH sales with the real assets, but definitely not all.
Naked selling suggests a speculative illicit activity that profits a few speculators while harming investments.
Should we keep using crypto exchanges? Many still do, but they should question if it serves their investments.
We examine Bitcoin Cash, but maybe more cryptocurrencies face the same issues. Any investor should be worried when such practices apply in any exchange.
BCH is at the hands of manipulators when it sits in centralized exchanges.
The data is there on the charts, and the charts don't lie when expressing an artificial supply pressure for Bitcoin Cash that can be multiple times higher than the normal supply. Moreover the often withdrawal suspensions of BCH means Binance operates with fractional reserves.
Celsius
This is just a small part of investigating Celsius and is only relevant to how BCH deposited in this platform is used by "whale" traders to short Bitcoin Cash in futures exchanges.
Celsius is about to completely withdraw from the US market after it received multiple Cease and Desist letters since September 2021 from security regulators of several states (New Jersey, Kentucky, Alabama, Texas, NYAG), and eventually failed to comply with providing convincing information on its investment strategy.
Following the regulative action taken against Celsius, on April 11th, 2022, the company announced it will comply with the US regulation and stop offering its services to new customers in the country.
Right after this announcement, massive shorts closed and Bitcoin Cash price rallied. (more info).
So, shorting BCH bots didn't malfunction as some of us suspected, but a small short squeeze took place as Celsius shorters had to close their position, and withdraw to pay back the lenders at the Celsius platform.
The result was this. On April 12th, a massive upside price movement for Bitcoin Cash was spotted, during a time when the rest of the cryptocurrency market was slightly dropping.
BCH went from $290 up to $350 (+12%) in no time as Celsius shorts were closing and created the short squeeze.
Yet, again, even this chart fails to explain how the price didn't proceed higher than $380. (Guessing here that) the typical algorithms in the BCHBTC trades took control to keep the price levels suppressed, especially in periods when Bitcoin Cash was gaining a lot of popularity with the Caribbean adoption, multiple developments, and only positive news.
Perhaps the recent suspension of withdrawals on Binance explain that more BCH were sold than existed in exchanges.
Celsius is just one of the (Tether-related) businesses that proceed with lending massively tokens and coins to "institutions" and "investors" as it proclaims.
It seems Celsius was overly-focused on shorting Bitcoin Cash than having any other business model. This is what the charts suggest, and there is no transparent data presented by this company on its approach or use of the staked crypto, or the entities it lends out the crypto of its investors.
The borrowed Celsius coins are used for shorting practices though as this is how shorting works, anyone will have to borrow to be able to sell.
Celsius offer this for various cryptocurrencies, however they have done this rather excessively with BCH.
The chart explains a lot more than what is released to the public by this company.
If you are lending Bitcoin Cash to Celsius, you are handing over your BCH to the wolves that plan to short Bitcoin Cash and sustain a low price for years.
By looking at the charts and connecting the dots, we realize this company based its operations on shorting Bitcoin Cash.
A practical solution to this attack
Withdraw your Bitcoin Cash from any unfriendly to Bitcoin Cash centralized platform. It is damaging BCH all this time to hold Bitcoin Cash at Gemini, Kraken, Coinbase, Binance, or any centralized crypto bank or platform.
SmartBCH is also a reasonable solution offering yield rewards when providing liquidity for BCH/flexUSD, and another DEX, Verse, is already released by Bitcoin.com.
Eventually, Binance won't be able to support high artificial supply as it will be completely exposed to naked shorting practices.
The binance chart creates a bleak image for Bitcoin Cash traders and investors. It is an irrational chart with signs of a cryptocurrency suppression mechanism suggesting an attempt to keep BCH at an artificially low price.
Celsius is not transparent and its fate is tied to Tether, and it follows similar practices to this company.
In Conclusion: Bitcoin Cash Is Severely Suppressed
Bitcoin Cash price is suppressed and naked shorting BCH in exchanges. Sales in spot market on Binance don't represent actual BCH sales, and withdrawals are often suspended until the exchange covers its BCH reserves.
Bitcoin Cash is the only cryptocurrency competitive in the payments sector with plenty of initiatives worldwide to create awareness and onboarding new merchants and businesses daily.
Bitcoin Cash offers the most robust, cost-efficient, and environmentally friendly PoW network. It is a state-of-the-art cryptocurrency in any terms we examine it and contains several professional teams of developers working towards enhancing it further to achieve global adoption levels.
Yet, it is being severely shorted and price-suppressed even with fraudulent methods of naked shorting which artificially increase supply (liquidity) in the market.
There is only one way to deal with this dire situation:
Withdraw your Bitcoin Cash from exchanges, research how to create a cold storage wallet or use a hardware wallet device and use Bitcoin Cash with a non-custodial approach.
Holding BCH in exchanges or centralized crypto-banks is only hurting the price of BCH. Eventually, it hurts the investors of Bitcoin Cash as well since their "earnings" are not enough to cover the loss from the use of their BCH.
The artificial supply of Bitcoin Cash tradeable in exchanges seems to be numerous times higher than the actual supply at this stage. Removing a small part of the actual supply will create various issues for both these exchanges and the BTC whales aiming to further decrease the BCH price.
Perhaps at this point, the only exception is CoinFLEX, an exchange that presents an honest approach to Bitcoin Cash investors. Traders can find a professional environment on this exchange instead of Binance or shady crypto-banks.
Cover Photo: by " Sponchia" on Pixabay (modified)
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Binance right now suspended BCH withdrawals.