We have passed an incredible week in the crypto ecosystem. The second largest crypto exchange melted in front of the eyes of people and the funds of millions of people have gone with the failed operations of the FTX team. First, they kept money inside the platform, then they got hacked 😶
It is obviously an unforgettable event in crypto history. Though we all adopt the motto that keep your assets in your cold wallet because not your keys; not your money, we are, once again, deceived. No matter how big a crypto service provider is, it is always a matter of FUD against them to lose millions of dollars in seconds.
Crypto is Driven by Emotions
We should admit the fact that crypto is an emotional market that directly reacts to both positive and negative occasions. It might be related to its 7/24 open nature and the Risk/Reward ratio that pushes people to be more sensitive against anything that happens.
In most cases, greed is the one that is fed by the whales to dump their coins on those who are overhyped. However, in a bear market, it turns into disbelief and fear. In my opinion, the Centralized Exchanges have taken their lessons from the collapse of FTX and the losing credibility of Crypto.com
These popular projects of crypto are deeply in trouble. The former one is out; the latter one tries to recover. It's not easy for crypto projects to handle a growing FUD around themselves but the FUD can easily eat up the whole market share that they have.
Mild Regulations for Credible CEXs
I think the recent cases of BlockFi, FTX, and many other zombie crypto projects showed that Centralized Exchanges do not protect customers at all! The sad reality is acknowledged in a hard way. People started to feel more positive towards regulations since it is like gambling if someone keeps his/her funds in an exchange for even a single day.
I expect to witness a Level 1 regulation for the crypto service providers that hold 1:1 crypto assets in their wallets and those that will keep enough reserves in the banks as partial insurance of customer funds.
As time passes, we may see the regulation-friendly steps taken by every project so that they can pretend like "credible" ones. I think 2022 will be the last wild times of crypto as regulation will eventually hit all crypto projects once they are identified and/or categorized by the regulators.
FTX’s collapse “means not only a kind of normal chaos for the industry but also a lot of worries about the credibility of the industry and its ability to actually run itself,” Yadav told The Post - Washingtonpost
Killing crypto does not contribute to any parties but, when it is regulated, it will be another sound investment option for investors. While achieving this goal, I think there will be more CEXs in trouble.
What do you think about it?
Let's Stay Credible 😉