Crazily Issuing Air Coins and Angrily Cutting Market Makers, What’s Really Going On?

Recently, BNB's wild operations have been continuous. One is that they froze the funds of several major market makers, and the other is that during this time, they crazily issued worthless air coins. I believe many people also don’t understand what BNB is really doing, so today we will try to dissect some of his possible calculations behind this, right? What exactly does he want to do?

Before we talk about this, let's discuss the BN or the exchange ecosystem. We know that in traditional financial markets, exchanges, market makers, and investors need to ensure a relatively clear set of rules and a regulatory framework to determine what? To ensure a relatively fair state. Although there is definitely no absolute fairness, investors are mostly at a disadvantage most of the time, but at least you have to present something, right? You can’t be too ugly.

But in our circle, there is none of this. The centralized exchanges often provide the first trading platform, and they are also the biggest market makers in it, and they help you custody your assets. They also have a venture capital department, and they can manage all the IPO processes for your coins, right? So this entire process from upstream to downstream is completely occupied by them. Therefore, this dual-role model itself is a very distorted product in our crypto circle. If this continues long-term, it is certainly not sustainable.

You first have information asymmetry. You have access to all user data in the exchange, including holding positions, liquidity depth, liquidation prices, average holding costs, total profit and loss, right? If you have such information, you can accurately trigger a one-click liquidation for a specific account or a series of accounts. You either need to make all this public information available, right?

Secondly, your issuance rules lack specific execution standards, right? Many times it can just be a matter of Zhao Changpeng's word. If you put this in the traditional field, you would definitely be in trouble; someone would be there to check your water meter in no time. Besides, you continuously cut leeks and squeeze the market's liquidity, and no one can regulate you. Previously, the SEC could manage it to some extent, but now that Trump has invested, you can definitely be even more reckless, right?

Because it is not a publicly listed company, all of its coin listings, profits, and a series of operations do not need to provide financial reports and trading records to the SEC.

Having discussed these, let’s look at the first thing he did: freezing several market makers' fund accounts. How to understand market makers? You can simply understand market makers as financial intermediaries managing buying and selling in the market. For example, below are our buy orders, and above are our sell orders. We are retail investors. The main function of a market maker is to ensure that when you want to buy, someone is there to sell to you, and when you want to sell, someone will take your order. It’s that simple. They facilitate the transaction. All the orders placed are called limit orders, which is what we refer to as liquidity in the market. The higher the money placed at each price level, the better the liquidity.

So why punish him? The reason is that while he was acting as a market maker, he not only failed to provide corresponding liquidity but also kept dumping prices. Can everyone understand? He was only cutting leeks but not contributing back to the pool, right? He manipulated the prices and cut leeks using his advantages in the market, including information asymmetry. He had insufficient buying pressure to take retail investors' orders and was just selling.

So why only freeze them now? The first reason is that the retail investors have become smarter; they can probably see through what tricks you are playing, right? The resulting public pressure means that you can no longer turn a blind eye; you can only pretend to act or do it intentionally. You can only get rid of a few market makers to act as scapegoats to relieve this pressure. One is to kill the chicken to scare the monkey, and the other is that BN needs to know that BNB is also the largest market maker here.

If I want to issue a coin, you can entrust BNB to manage the coin value, but what’s the premise? You need to pay BNB a certain fee, right? To put it nicely, it’s called value management; to put it bluntly, it’s actually price manipulation to cut leeks. If you do not entrust BN as a market maker, then he cannot earn this part of your money. If you do it yourself and earn a lot in my space, right? If you mess around in my territory, then I definitely have to take action against you, right?

This is the first point. The second point is that he has recently launched a large number of worthless air coins these days, and it seems that six were launched on the 28th alone. Let's take a look at the trend of these coins. Basically, they all rise a bit at the opening and then go straight to zero, heading in the direction of zero. This is basically the trend, a little spike up to wipe out the shorts, and then all the way down, all the way down, it's basically the same routine. And now, today there’s another new coin to be launched, what’s it called? This GUN, right? It’s still going to be launched. The market is already like this, and they still want to launch like this.

I believe there are possibly two reasons behind this. The first is that his current shareholder structure may be different from before. For instance, we mentioned yesterday that the Trump Fund might secretly hold shares, along with some sovereign funds from Abu Dhabi and some situations we may not know about. You must understand that once you absorb this funding, you may have to be responsible for the interests of the shareholders. So how can you be responsible for the interests of the shareholders? You definitely have to make money, right? So the issuance of air coins may provide a relatively clean channel for these mysterious forces behind the scenes, right? The second is that he can directly cash out through these air coins, right? These might be the two reasons.

Of course, there may be one last point that he is crazily squeezing the current market liquidity. We know that the overall market sentiment is very low. Even if you crazily issue these coins, you may not be able to sell much, right? You can’t harvest too much because everyone's sentiment is already very pessimistic, right? We know that retail investors always chase after rising prices and never chase after falling prices. The more it falls, the worse the liquidity below becomes. I believe BN definitely knows this, but why do we think he continues to crazily issue these worthless coins in such a situation, disregarding his own image?

This likely brings us to our speculation today: Could he be preparing for a large-scale market liquidation? He seems to want to squeeze all liquidity from the B circle in advance. Why do I say this? First, I want to tell you that every cycle of the market, at the beginning of every bull run, is usually accompanied by a very bloody large liquidation. It was like this in 2008, and the same is true for the March 12th event in 2020. It’s about quickly consuming all the existing USDT in the exchanges. What’s the benefit of doing this? When he finally launches the last attack to cleanse those large whales, he can quickly reach the liquidation price at the lowest cost. Do you understand?

So now it’s very likely that we are talking about the calm before the storm, and we are waiting for that final drop, perhaps this month, perhaps within this month. Because his actions are likely preparing for the situation to come, right?

So if we assume this logic holds, what should we do? First, he has already started targeting market makers, so he definitely won't be polite to retail investors. I suggest everyone not to buy those worthless air coins or new coins. No matter how many he issues, someone like us, the long-term investors, he absolutely cannot squeeze a single penny from us because we won't even look at these coins, right? We won't even glance at them.

Second, try not to play contracts for those altcoins. Because the current market sentiment is already very pessimistic, the liquidity is poor, meaning there are probably very few people trading in spot markets, and if you play altcoin contracts, it’s very likely that you are the only one trading in that altcoin, right? We all know if this is a game of big against small, right? If you are the only one playing, then who can he kill, right? He can only kill you, right?

So do not play with leverage on altcoins. Secondly, even for mainstream coins, you should try to lower your leverage as much as possible. Even though many times when you are told to do something, you may feel reluctant, but do not gamble. Even if you win, let me tell you, 90% of the time you won't be able to hold on to it, you know? But if you lose, you may end up at zero, right? You need to clarify whether this investment is really worth it, right?

So finally, I remind everyone that the B circle is still a market that lacks regulation, and now many professional players have joined in. If you do not have a deep understanding of this, the difficulty of your game will be very, very high. If you lose everything, I think that’s still considered good; in many cases, you may end up deeply in debt, right? If you can avoid losing money here, that’s already very impressive, right?

So whether it’s exchanges or market makers, in the end, what can determine our fate is still our own understanding and choices, right? Always remember that risks exist. Sometimes I like to analyze this issue very pessimistically, but I look at the future optimistically. Everyone should know that once we set a lower limit, we can do what we need to do. All situations falling within our expectations is normal; this is the simplest yet most practical way for you to survive long-term in this B circle, okay?

Finally, a heartfelt word: I tell people every day not to get too emotional, but there are still brothers who rush forward and take the fall. If you really can't control yourself, just join the group and listen to the commands.

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