FTX is done — What’s next for Bitcoin, altcoins and crypto in general?
2022 was a tough year for crypto, and November was especially hard on investors and traders alike.
While it was incredibly painful for many, FTX’s blowup and the ensuing contagion that threatens to pull other centralized crypto exchanges down with it could be positive over the long run.
Allow me to explain.
What people learned, albeit in the hardest way possible, is that exchanges were running fractional reserve-like banks to fund their own speculative, leveraged investments in exchange for providing users with a “guaranteed” yield.
Somewhere, across the crypto Twitterverse, the phrase “If you don’t know where the yield comes from, you are the yield!” is floating around.
This was true for decentralized finance (DeFi), and it’s proven true for centralized crypto exchanges and platforms, too.
Who would have known that a few ill-timed bank runs would pull down the entire house of cards by proving that while exchanges appear to have high revenue and tons of tokens on their books, many are completely unable to meet user withdrawal requests?
They took your coins and collateralized them to fund highly speculative bets.
They locked your coins in centralized DeFi platforms to earn yield, some of which they promised to share with you.
They placed user funds, along with their own reserves, into illiquid assets that were hard to convert into stablecoins, Bitcoin (BTC) and Ether (ETH) when clients and platform users wanted to access their funds.
Not your keys, not your coins.
Never has the phrase rang truer.
Let’s explore a few things that are happening in the crypto market this week.
As Cointelegraph reported earlier this week, crypto investors panic-withdrew record amounts of Bitcoin, Ether and stablecoins from exchanges.
Separate
Read more on cointelegraph.com
