crazylogman
New member
Exchanges have been known to manipulate prices by controlling the availability of various cryptocurrencies or altcoins through different strategies. This practice has been observed more frequently with Bitcoin Cash (BCH) compared to other cryptocurrencies. When users buy and self-custody their crypto, it reduces the amount of the specific altcoin held by the exchange, leading to potential price manipulation.
In response to dwindling reserves of a particular altcoin like BCH, exchanges may raise interest rates on loans for that altcoin to incentivize users to deposit more. If an exchange fails to secure enough of the altcoin for withdrawals due to low reserves or naked short selling, they may freeze withdrawals until they can acquire the necessary funds. Instances of insolvency disclosures and withdrawal freezes.
This situation has been observed with exchanges like FTX, Genesis, Coinflex, and Mt. Gox in the past, leading to insolvency disclosures and withdrawal freezes.
For large investors or "whales," a notable sign of an exchange's insolvency is a sudden spike in (for example) BCH/BTC or BCH/USD pair after a massive BCH purchase followed by a withdrawal request. This spike indicates that the exchange may be operating on a fractional reserve basis, purchasing BCH only when users request withdrawals, which can be unsustainable in the long run.
In response to dwindling reserves of a particular altcoin like BCH, exchanges may raise interest rates on loans for that altcoin to incentivize users to deposit more. If an exchange fails to secure enough of the altcoin for withdrawals due to low reserves or naked short selling, they may freeze withdrawals until they can acquire the necessary funds. Instances of insolvency disclosures and withdrawal freezes.
This situation has been observed with exchanges like FTX, Genesis, Coinflex, and Mt. Gox in the past, leading to insolvency disclosures and withdrawal freezes.
For large investors or "whales," a notable sign of an exchange's insolvency is a sudden spike in (for example) BCH/BTC or BCH/USD pair after a massive BCH purchase followed by a withdrawal request. This spike indicates that the exchange may be operating on a fractional reserve basis, purchasing BCH only when users request withdrawals, which can be unsustainable in the long run.