Traders love to reveal their "secret sauce" for making millions of dollars in crypto. Every day there's a new strategy, a new approach, a new way to beat the market. Everyone is so focused on copying trading signals, and following influencers, that they aren’t noticing something much larger at play here.
Way deep down in the crypto space, the exchanges have found a way to be more profitable than any trading strategy. They have created an entire market from nothing, and it is making them more money than you could ever imagine.
Let’s take a step back and think about crypto trading for a second. Typically, buying and selling crypto means something, tokens must actually move. In order to sell Bitcoin, somebody has to have it, the same thing goes for Ethereum (and other cryptos), it’s pretty straight forward right?
But this is where the futures market disregards all of those rules. These exchanges came up with some brilliant schemes - they don't even need any of the cryptocurrency at all. Zero, none.
They simply create random trading pairs with USDT (Tether). And, that's it. There is no convoluted infrastructure, or complicated process to deal with actual cryptocurrency. Just make a pair, and see what happens.
And then there is another remarkable thing, traders fly to these pairs like a moth to a flame. They open long positions, betting the price is going to go up; they open short positions, betting the price is going to come down. Meanwhile, these exchanges rake in whatever fees they charge on top of every single transaction!
The volume of this operation is staggering. These exchanges are processing literally billions (more accurately multi-billions) of dollars worth of Bitcoin futures trading orders, and they do so while the volume of Bitcoin they have on the exchange is never enough to reach such an amount of money.
This futures market is not just a sideshow; it is actually what is driving the entire Bitcoin market. Everyone is doing chart analysis and reading news articles, while these paper trades are pushing prices higher and lower.
Exchanges have developed the perfect money machine. They don't need to have massive amounts of crypto. They don't need to have Taylor Swift level infrastructure. They just need to keep making markets out of nothing and then financially benefit from the fees while traders speculate on the synthetic asset.
This is click bait on steroids; not the headline that gets you to click or the trading signal that looks good, but a market that is completely made up out of thin air. And it is probably the most lucrative click bait in all of history.
The next time someone share's their fail-proof trading strategy or their secret way to beat the markets, just keep this in mind: There is no money in trading these markets. The money is in creating them.