When an investor puts money into an exchange, they don’t have to worry if it runs out tomorrow. Their only concern is the price of investing in Bitcoin, Ethereum, or other cryptocurrencies.
Just as we don’t want over-regulation, the crypto industry needs a transparent framework.
FTX could cause more cryptocurrency companies to go bankrupt
FTX is almost $3.1 billion Its top 50 creditors, and well beyond. It’s still possible that more companies will go bankrupt due to the FTX collapse, but FTX was the one most likely to go bankrupt. Many smaller subsidiary companies investing in FTX could go bankrupt next. We are already starting to see some of it in action.
For example, Genesis Global Capital, a subsidiary of Barry Silbert’s crypto empire Digital Currency Group, suspended customer withdrawals after the failure of FTX. As you can imagine, this only surprised the crypto market even more.
As reported by Cointelegraph, Genesis Global had $175 million worth of funding in FTX. Genesis Global’s parent company, Digital Currency Group, quickly injected his $140 million worth of emergency stock into the subsidiary to cover the losses.
FTX Could Be the Beginning of the End of the Crypto Bear Market
In the two years following the big bull market in 2017, Bitcoin fell to $3,500 and there was a feeling that Bitcoin was over and cryptocurrencies were over. That’s the sentiment when the price is nearing the bottom. Bitcoin is set to drop further, although it has not hit the bottom yet. This bottom, combined with regulations likely to be introduced in 2023, will bring back a lot of money to the industry.
FTX has been compared to both Enron and Lehman Brothers. When Lehman Brothers went bankrupt in his 2008 financial crisis, it shook the investment world. But ultimately, that was the beginning and the end of that crisis. The market flashed out for about six more months before hitting a spectacular bottom in the first quarter of 2009. From that trough, it has climbed several hundred percent to the all-time highs we have seen in 2021.
Before we reach the post-FTX tipping point in the crypto world, certain things need to happen. For example, you need to understand the difference between securities and commodities in the crypto market. Since Bitcoin is a commodity, we already know that it is regulated by the CFTC.
Many other cryptocurrencies and tokens will require standards for reporting and auditing. SuchWhen Apple reports earnings, you’ll know earnings, earnings, guidance, and more. Investors can immediately see the value of the company.
Crypto Today Conclusion: 2023 Will Be The Year Of Regulation
Having money on an exchange today is risky. As with portfolio holdings, it is always wise to diversify your cryptos across different brokers and take advantage of cold storage.
Projects are sure to fail, but cryptocurrencies are not dead. Funding for projects will dry up and investors will become more selective. This is common in bear markets, especially recessions. Ultimately, the top 100 Bitcoin, Ethereum, etc. will survive.
One thing is certain, governments want to make a case for cryptocurrencies as a whole. Custodians should be regulated in the name of transparency.If they misappropriate funds, they will have to face the consequences – as well Sam Bankman-Fried After this week’s arrest.
The Federal Reserve (Fed) may be reluctant to print money for years due to inflation concerns, but the U.S. will eventually end up in a severe recession or recession with unemployment hovering around 20%. , and may be forced to continue quantitative easing again. Fiat currency will be diluted again.
Investors will want something like Bitcoin. Investors will also want Ethereum and other cryptocurrencies once regulation is cleared by the U.S. House of Representatives in 2023.
(As always, be aware that things can change quickly. Stick to the chart as a guide. )