We need to drain OTC desks. They are turning BTC into paper \ stacker news ~bitcoin

We need to drain OTC desks. They are turning BTC into paper

1118 sats \ 20 comments \ @037bedfa93 15 Jan bitcoin_beginners

This is a call to action for all Bitcoin owners: whether you're a Bitcoiner, a Shitcoiner or just a tourist.

ETFs are backed by actual BTC acquired from OTC desks, which do not move the market.

But where does the liquidity come from?

It comes from us. What do you think staking is for (is 10% APY really worth it)? But that's not all. In classic FTX fashion, they will first utilize your staking, then your deposit, and finally, the wrapped Bitcoins, most of which are essentially custodial IOUs centrally backed by a single exchange.

As a result, your BTC on aforementioned services will be replaced by paper bitcoin.

Subsequently, the OTC desk will attempt to repurchase all of its debts from the market gradually to prevent any significant market fluctuations, if they can't they will pull the usual tricks. Have you ever wondered why during unexpected market movements all the exchanges go into maintenance, they pause withdrawals and start pumping out stacking promotions? That's not a coincidence or market manipulation, that's to rebuild the liquidity.

So, if you have even just $10 worth of Bitcoin lying within reach of an OTC desk or exchange, it's time to take action.

This includes (from worst to worse): a) Bitcoin held in any staking service (even decentralized ones) b) Bitcoin held on any exchange c) Bitcoin held in crypto or Bitcoin to fiat cards d) Wrapped Bitcoins, excluding L-BTC and Lightning e) Bitcoin held in custodial Lightning wallets unless they have a proof of reserve

What you should do:

a) Temporarily withdraw your Bitcoin to a self-custodial solution (if you can't do all 5, please do at least the first 4)

If you'd rather not deal with mainchain fees or navigate Lightning liquidity, and that's completely understandable, withdraw to Aqua or other liquid wallets, better if they support lightning-liquid interoperability so you can keep using lightning without going custodial.

The simplest method to convert wrapped BTC is to utilize a no-KYC exchange like

to swap into Liquid or Lightning to your Aqua wallet.

The best method is to redeem them from the exchange that is emitting the wrapped token so that they are forced to release the reserves (eg. BTCB should be redeemed from binance).

Please note: if you're looking to avoid mainchain fees, do not use Muun, as it isn't a Lightning wallet.

b) Encourage your friends to take the same action.

If we all do our part we can stop or limit their shenanigans and get the omega candle.

Please spread the word, rewrite this post to make it more beginner friendly, do whatever it takes.

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346 sats \ 6 replies \ @kristapsk 15 Jan

Wrapped Bitcoins, excluding L-BTC and Lightning

Lightning is not "wrapped bitcoin", it's bitcoin proper.

20 sats \ 5 replies \ @037bedfa93 OP 15 Jan

Only when the channel is closed it is settled with real btc until then in lightning you are transacting contracts of ownership for a certain value of sats locked in the channel, that are virtually considered as their future value in real sats by lightning wallets.

This is the same as any other wrapped btc, the difference is that lightning cannot be cheated.

150 sats \ 4 replies \ @kristapsk 15 Jan

Lightning network involves parties exchanging co-signed fully valid Bitcoin transactions that can be broadcast to P2P network at any time. So it's completely different from wrapped bitcoin solutions.

1 sat \ 3 replies \ @037bedfa93 OP 15 Jan

Yes, but from my point of view a btc transaction is real only when it is added to a block, everything else is a potential transaction that might or might not happen, for example if you lose the state of your ln wallet you will never be able to broadcast your closing transaction.

In the same way an unwrapping transaction is a potential transaction that does not yet exist in the blockchain, the difference is that lightning is ruled by code, you can broadcast the closing transaction yourself, while what we commonly refer as wrapped btc is ruled by trust of a third party that is supposed to generate said transaction on demand.

In fact Lightning doesn't require both end of the channel to be on the same blockchain.

It is very different from a technical point of view, but the abstract concept is very similar.

0 sats \ 2 replies \ @kristapsk 15 Jan

for example if you lose the state of your ln wallet you will never be able to broadcast your closing transaction.

And, for example, if you lose onchain wallet data and it's backups, you will never be able to spend that onchain bitcoin.

abstract concept is very similar.

No. Lack for requirement for a trusted third party and operating with native Bitcoin transactions is what makes the difference.

1 sat \ 1 reply \ @037bedfa93 OP 15 Jan

And, for example, if you lose onchain wallet data and it's backups, you will never be able to spend that onchain bitcoin.

No, you only need the seed and derivation path that is part of the protocol, the lightning state is not.

0 sats \ 0 replies \ @kristapsk 15 Jan

seed and derivation path

That's what I mean with "backups".

part of the protocol

Part of which protocol? It's bunch of BIPs, Bitcoin Core doesn't implement most of them, for example.

238 sats \ 2 replies \ @siggy47 15 Jan

None of your advice is bad, but there is less bitcoin on exchanges than ever. I can't imagine there's a lot of wrapped bitcoin being used in staking in 2024, but maybe I'm ignorant in the ways of the shitcoiner.

OTC bitcoin trading is just peer to peer transacting between big players. It has always existed, and always will.

Most people on SN are practicing self custody, but your post is a good lesson for bitcoin beginners.

51 sats \ 1 reply \ @037bedfa93 OP 15 Jan

The bitcoin that is wrapped can be lent even if not in staking, after all the underlying btc is held by the exchange and the proof of reserve is just a number they put on their website and an once in a while audit. WBTC is claimed to wrap $6B alone, BTCB is $2B.

The bitcoin on exchanges is also just the amount of btc held by the known addresses, we have no way to know how many other addresses are actually owned by OTC desks or exchanges.

What are the big players that are selling BTC at a discount to blackrock while simultaneously dumping the market?

0 sats \ 0 replies \ @siggy47 15 Jan

I'm sure your information is accurate. No doubt the big players are engaging in this price manipulation. Personally I have been railing against futures and spot ETFS for as long as I can remember. Before there were bitcoin ETFs of any kind whales were playing similar games amongst themselves. That being said, I don't worry about NGU, and snap up the cheap sats with the big boys when the price crashes.

50 sats \ 0 replies \ @jtwoodhouse 15 Jan

Lol this isn't how markets work at all. Price and volume isn't fixed. If you drain OTC desks, guess what, the price goes up to a point where more sellers comes in.

50 sats \ 0 replies \ @Lost_dogz 15 Jan

OTC is just another form of peer 2 peer, you know, as in "peer to peer electronic cash", and it absolutely does move the market. Not a single miner or whale will offer to sell their Bitcoin below market, or at least not without other perks involved

63 sats \ 0 replies \ @cleaningup12 15 Jan

I've got mine on blockstream green, it's a hot wallet but it's self custodial

Got my Ln on phoenix

121 sats \ 0 replies \ @godlikeXi 15 Jan

So how to you surmise to defeat billions of dollars of capital? The attention goes where the money flows. Buy, HODL and enhance your quality of life.

If you're just HODLing and your life hasn't improved you lost. Life is about living in abundance and not being some kinda of living meme. Start living or start dying. No in between.

22 sats \ 0 replies \ @OT 15 Jan

Take self custody

We've all been saying this forever

22 sats \ 0 replies \ @DiedOnTitan 15 Jan

Agreed. Important yet difficult. Someone in my family said they plan to sell their bitcoin, currently stored in a shitcoin hot wallet, and buy the ETF. Definitely a cringe moment, and under the particular circumstances, I had to bite my tongue.

We are still in the early protocol gluing phase, yet Bitcoin is the only asset that has a remote chance of becoming Global Base Money™. I just don't see how the USD will maintain their unique position (reserve currency).

21 sats \ 0 replies \ @riberet19 15 Jan

You are right, self-custody is the cure for this disease, the less bitcoin in spot the exchanges and other entities of the same operation have, the better, it is your money, your decision, otherwise, they will come back to tease us again.

0 sats \ 0 replies \ @cyberpunk02 15 Jan

Jan 3? hold your keys! plus Aqua shill 😄

0 sats \ 1 reply \ @cryptofolyo 15 Jan

Black Rock alone needs to buy 5000 + BTC per day as per the stats of first two days of ETF launch So how many OTC Bitcoins are there in total?

10 sats \ 0 replies \ @SpaceHodler 15 Jan

I've heard somewhere there was $50b worth on Coinbase.