Traders: Binance Hack Could Signal Bear Market Bottom, Like FTX Collapse

Renowned quantitative trader Killa believes the Binance hack will mark a market bottom, akin to the FTX collapse. With substantial Bitcoin holdings, Binance has an incentive to push prices higher to offset losses, potentially deploying billions in retail-invisible long positions. While short-term rebalancing is expected, Killa remains bullish on higher timeframes.

A Market Bottom Signal?

Killa (@KillaXBT), a trader with seven years of experience and a following of approximately 240,000, posted on X (formerly Twitter) on the evening of October 30th, Taipei time, that the recent Binance hack will serve as a marker for the market’s bottom, much like the FTX implosion. He argued that the most effective path for the exchange to recoup losses would be to drive prices significantly higher, rather than allowing them to fall further.

Billions in Long Positions and Exchange Profits

The trader emphasized that Binance holds billions of dollars in Bitcoin and possesses the capacity to execute massive long positions that are “invisible to retail investors.” He estimated that the exchange may have already profited around $1 billion from liquidations, slippage, and fees.

The FTX Analogy and Long-Term Outlook

Killa’s core analogy is straightforward: the collapse of FTX marked the bottom of its cycle, and he views the Binance hack as a similar “bottoming signal.” He suggested that after the recent flash crash and sell-off pressure, the price damage is temporary, and the longer-term direction (on higher timeframes) is becoming clear after a period of rebalancing.

He clarified that he is not advocating for an immediate, painless rebound but acknowledged that the market needs time to digest the impact in the short term. His focus is on where structural forces will drive the market after this “temporary damage” is overcome.

Incentives for Price Recovery

According to Killa’s reasoning, exchanges are more likely to recover losses quickly by pushing prices up rather than letting them fall further. He pointed out that Binance’s substantial BTC holdings theoretically allow it to initiate billions of dollars in long positions, undetectable to retail traders, thereby driving the market upward with its existing capital.

He also offered his own estimate that the recent volatility may have generated approximately $1 billion for exchanges through a combination of liquidations, slippage, and fees.

Contrasting Views and Market Dynamics

Killa had previously questioned exchange motives in a hyperbolic and sarcastic tone, making sensational statements rather than verifiable accusations. Concurrently, some traders are positioned bearishly, with one large holder reportedly increasing their bearish Bitcoin options after the Binance hack, indicating that not everyone shares the view that the market has already bottomed.

For traders still processing the aftermath of the flash crash and fund freezes, Killa’s perspective shifts the focus from “the hack itself” to “who has the ability and incentive to drive prices up.” If his framework holds, this period of volatility is more akin to a rebalancing near a bottom rather than the start of a new bear market. On higher timeframes (longer-term), he has clearly adopted a bullish stance.

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