The effect of fractional reserve bitcoin

armantheparman
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The effect of fractional reserve bitcoin

There are people that paid for bitcoin that doesn't exist (fraction reserve by exchanges/custodians are the culprit).

Their demand (supply of dollars) did not contribute to the price of BTC.

Those "bitcoin" will disappear (seeing it play out now), but that disappearance does not directly damage the price of Bitcoin, nor adoption.

They weren't contributing to either in the first place. This is poorly understood.

Many victims will finally realise they must hold their own keys. This will lead to a increase of bitcoin held in self custody, and this directly contributes to demand, as the coins are a true portion of the limited 21 million coins.

Any purchase of fractional reserve Bitcoin is no different to using money to buy NFTs.

Granted, the mess this week will deter people from "crypto", but many of these people would have simply bought non existent bitcoin anyway.