Post this 2020 halvening miners will cease to be the biggest sellers of Bitcoin. It’ll be the dawn of the crypto exchange as the leading seller. The biggest sell pressure on Bitcoin will soon be from exchanges selling their BTC fees collected into fiat.

You can think of exchanges as tax agents on traders. That tax, extracted in fees in BTC, gets dumped onto the markets and sold for fiat. It’s similar to miners where coins gained by diluting the supply get dumped on the market that new demand needs to absorb.

This is very different from traders buying or selling. When we say traders are “buying” or “selling” this is a myth. Every trade is matched, every trade has a buyer and a seller. (When we say the market is buying or selling, we actually mean smart money is buying or selling.)

There’s only two unmatched sell pressures on the market. (1) Miners who dilute the supply and sell onto the market, this is the hidden tax via monetary inflation. And (2) the exchanges who tax the traders and sell onto the market.

With the rise of BitMEX and now strong competing futures exchanges all pushing billion dollar daily trade volumes, the picture looks like this: 

1800 BTC/day from miners pre-halvening 

900 BTC/day from miners post-halvening 

1200 BTC/day from exchange fees

To hit this home, it’s really quite easy to generate $400m of monthly futures trading volume from a $500k collateral account when trading short term candles. That generates as much as $80k of fees for the exchange. 8BTC of fees sold onto the market that month on a 50BTC account.

When I look at the long term price chart of BTCUSD 2017-2020, the rise of the BitMEX style futures exchanges has made a irrevocable footprint on the price, we have much more sideways now from the additional sell pressure.

While price moves more sideways, this creates an environment where large leverage traders have an easier time strategically liquidating the bulk of traders from their positions. Like the cascading 4k->14k short squeeze of 2019. Equals more volatility.

While futures exchanges bring liquidity to markets, offers useful hedging for legitimate use cases, they will be the largest bearish pressure on Bitcoin from here on in.

If we think Bitcoin needs “number go up” to exceed $1T and then $10T market cap to make a dent in the world (I’m one of those) then futures trading slows this vision down. Slows number go up, increases volatility.