Altcoin Hunters Of 2020
If you were an altcoin investor during 2019 and 2020 then you were most likely quite familiar with Hotbit. Prior to KuCoin, Hotbit was one of the few CEXs one could find up-and-coming altcoin projects. Not only that, but Hotbit often beat the market in the race to list new coins. This is where I picked up Solana somewhere between $0.20 and $0.30.
Despite being somewhat under the radar, and initially a rather small exchange, there definitely were perks to owning a Hotbit account. Regardless of Solana’s significant collapse, a buy at $0.30 still meant you were in the pound seats as an early SOL investor. Sadly, Hotbit announced earlier today that it would be ceasing operations on the 22nd of May.
Users have been urged to withdraw their coins prior to the 21st of June. Numerous reasons were given for the closure of the exchange, and I must admit, I think there is a fair amount of validity to the points given. Obviously, the FTX fiasco triggered a massive exodus from CEXs, as well as a hesitancy to make use of CEXs. Add to that the issue of a previous team member being involved in an SEC probe.
The platform was actually ordered to cease operations for a number of weeks while the matter was investigated. These are two very significant blows. However, I am of the opinion that much of this has been triggered by regulatory pressure. Exchange owners are aware of what is on the horizon, and I believe many will weigh up the situation and choose rather to exit the market.
Perhaps, some will be looking to find more decentralized options for continuation. However, when you consider the damage done to centralized exchanges, along with an ongoing regulatory headache… who would want to carry on, especially if the business is not that profitable, if at all? CEXs such as Binance and others are on a different level. For them, there is a lot at stake, and continuation makes a lot of sense.
How Hotbit manages to honor withdrawals is however going to be the deciding factor of whether it gets labeled a scam… or another exchange that simply chose to shut its doors due to the uncertainty and pressures of future business activity. Either way, it’s a sad situation. However, it also manages to display just how negatively the FTX debacle has managed to affect smaller exchanges.
Optimism Is Eventually Defeated By Reality
Many exchanges are still busy trying to win back the trust and respect of the market. They are not sitting well financially. However, they have chosen to ride out the storm, in the hope of better days. Depending on how long Crypto prices remain compressed, we may indeed witness a few more similar scenarios. Exchange owners are aware of how significantly volumes increase during bullish seasons and are desperately holding out for such a scenario.
If exchange owners are willing to navigate the murky waters of regulatory uncertainty and attack, then they will be doing everything possible in order to survive until the bulls return. Those who survive and meet the regulatory requirements (whatever those might actually be) will likely experience continuation. Those who survive, ultimately, stand the chance of securing CEX users who are now looking for an alternative.
Final Thoughts
This is unfortunately a period of “final chapters” for many. Not everyone survives and for different reasons. Some simply just give up, while others simply have no choice. My only hope is that Hotbit manages to close the final chapter in an honorable and amicable manner. Personally, I am not that happy about certain issues and feel this could have been handled a lot better. Anyway, that’s it for this one. Stay safe and catch you next time!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.