A Crypto research and market analyst stated that staking bitcoin on any exchange gives them the power to sell it. Many consider the option of storing bitcoin and other cryptocurrencies on exchanges as it eases the entire responsibility of keeping hold of your private keys.
At the same time, the safety breaches and increasing exploits pose a risk for users to store bitcoin on exchanges. To add to that factor, an analyst named Rufas Kamau believes that holding bitcoin on exchanges can also trigger price drops.
Keeping bitcoin on exchanges can lower its price, Rufas claims
Rufas Kamau, a market and research analyst, sheds his opinion on the above factor.
“If you buy Bitcoin and keep it at the exchange, you are net short, you are contributing to the price of Bitcoin going down, even if your goal is higher prices.”
Rufas Kamau
He explained in a long thread that what you get is a paper BTC if you purchase bitcoin from an exchange. He added that in order to discourage users from withdrawing BTC, exchanges charge higher withdrawal fees.
Adding to that, the exchanges encourage you to stake BTC; the higher you stake, the bigger the reward. This, according to Rufus, is another attempt to encourage users to keep their BTC on the exchange.
Rufas says that exchanges are selling the bitcoin staked and held with them to other buyers and rewards the original owner with a staking yield.
According to Kamau, investors who acquire BTC and keep it in exchanges face a deficit since the procedure allows exchanges to “print” BTC, lowering the price as the quantity grows.
“Keep your Bitcoin off the exchange” has always been the logical thing to do if you want to change the world with Bitcoin.”
Rufas
While many agreed to his assumptions, some Twitter users titled his expressions as wild speculations. While some exchanges might be practising this, LBank Chairman Eric told that the exchanges that practice this will surely fall.