The cycles of Bitcoin price movements can be punishingly volatile. Bitcoin has lost thousands recently out of nowhere, and this is to be expected when dealing with cryptocurrency.
The question is, who takes it the hardest when there’s a severe downturn in Bitcoin, with no looking up?
First, The Winners
It’s important to remember that exchanges take fees from trades regardless of the price of the asset. Therefore, major exchanges like Coinbase and Binance are actually the winners in the whole bear attack scenario we’re witnessing recently.
Coinbase Pro saw a volume of about $1.7 billion at time of writing. Binance, of course, saw a much higher volume, trading hundreds of assets: $12.8 billion. The more that moves through exchanges, the more they make in fees. That’s just the way of the world. And as people panic sell and buy the dip, that’s exactly what exchanges can be expected to be doing.
Retail exchanges are winning too. A price drop means that certain investors will be buying as much as they can get their hands on. The only question at this point is where the bottom actually lies.
Other winners include crypto gambling establishments. People see the value of their crypto holdings dropping, so they gamble harder in hopes of increasing them. The more you play, the more you lose, generally, so this translates into greater profits. I’m basing this on my own attitudes and experience, of course.
It’s important to note that when we say “winners,” we’re not saying that these people are necessarily profiting from the loss of others at this point. They’re just in businesses that aren’t necessarily going to see negative effects simply because the price of most tokens has dropped severely.
Smart traders are also winning in all this, being able to take bear positions as things have gone south.
So, Who’s Losing?
The biggest losers in the game are probably retail investors, who are seeing the value of their holdings plummet. Unless they seek shelter in stablecoins, they’re just going to have to wait it out, at this point.
There are other losers, of course. Crypto merchants, who accept cryptocurrency, may not dump it in time to actually realize the value of the transaction. They’re then forced to hold against their will, in order to not lose money on a standard transaction.
There are some who argue that crypto merchants are already losing due to the high fees and even transaction fees associated with accepting cryptocurrency and trying to turn it into fiat.
Does anybody really win when things start to go south? Except those who bet against the price of Bitcoin, of course.
Retail investors definitely have it worst in all this. The situation shows itself as absurd as things shake out. But there’s not much that anybody can do besides hold their crypto.