You may have heard about the "Bring Your Bitcoin Cash Home" campaign and you may be wondering why such a campaign exists so I would like to explain how it all came to be.
It started from multiple exchanges disabling withdrawals specifically for Bitcoin Cash and also big exchanges such as Binance started mining Bitcoin Cash aggressively shortly after, before enabling withdrawals of BCH again. These actions together with the price action of Bitcoin Cash raised a suspicion that these exchanges may have been engaging in naked short selling of Bitcoin Cash.
Naked short selling BCH meant that they are selling Bitcoin Cash which they don't have. How can they do that? Well, because these are centralized exchanges that just need to update their own database to display that you have the BCH in your account, but they don't need to have these BCH, until of course the users withdraw the BCH into their own (users) wallet. This means they can sell as much BCH (even beyond the 21 million available limit) as they want and display a fake account balance to you, until you decide to withdraw your BCH into your own wallet.
If the theory is indeed true that these exchanges had been engaging in naked short selling of Bitcoin Cash to deliberately suppress the price of BCH, then if everyone withdraw their BCH, the exchanges would be forced to buy them at any price to cover the withdrawals. It also meant that the exchanges who buy the BCH early, to cover their positions would benefit more than the exchanges who are forced to buy them at a higher price later, to cover their positions.
This is just a theory that came up because (1) multiple exchanges disabled withdrawals specifically for BCH (2) Binance disabled withdrawal for BCH, then started mining BCH aggressively before enabling BCH withdrawals again (3) the price action of BCH from constant selling as if someone has unlimited BCH to sell.
There are no disadvantages if everyone withdraw their BCH because it make sense to have the coins in your own wallet anyway. But if indeed exchanges or someone had been engaging in naked short selling, then the price of BCH can be unlimited when they are being forced to cover the users withdrawals of Bitcoin Cash.
You may have heard about the "Bring Your Bitcoin Cash Home" campaign and you may be wondering why such a campaign exists so I would like to explain how it all came to be.
It started from multiple exchanges disabling withdrawals specifically for Bitcoin Cash and also big exchanges such as Binance started mining Bitcoin Cash aggressively shortly after, before enabling withdrawals of BCH again. These actions together with the price action of Bitcoin Cash raised a suspicion that these exchanges may have been engaging in naked short selling of Bitcoin Cash.
Naked short selling BCH meant that they are selling Bitcoin Cash which they don't have. How can they do that? Well, because these are centralized exchanges that just need to update their own database to display that you have the BCH in your account, but they don't need to have these BCH, until of course the users withdraw the BCH into their own (users) wallet. This means they can sell as much BCH (even beyond the 21 million available limit) as they want and display a fake account balance to you, until you decide to withdraw your BCH into your own wallet.
If the theory is indeed true that these exchanges had been engaging in naked short selling of Bitcoin Cash to deliberately suppress the price of BCH, then if everyone withdraw their BCH, the exchanges would be forced to buy them at any price to cover the withdrawals. It also meant that the exchanges who buy the BCH early, to cover their positions would benefit more than the exchanges who are forced to buy them at a higher price later, to cover their positions.
This is just a theory that came up because (1) multiple exchanges disabled withdrawals specifically for BCH (2) Binance disabled withdrawal for BCH, then started mining BCH aggressively before enabling BCH withdrawals again (3) the price action of BCH from constant selling as if someone has unlimited BCH to sell.
There are no disadvantages if everyone withdraw their BCH because it make sense to have the coins in your own wallet anyway. But if indeed exchanges or someone had been engaging in naked short selling, then the price of BCH can be unlimited when they are being forced to cover the users withdrawals of Bitcoin Cash.