THE FALL OF CRYPTO EXCHANGES.
Which ones and how many crypto exchanges might end their games?
Coo! It’s me, Crypto Owl. Are you excited to find out the latest news in the crypto world? Ohh, at least I am! Sooo, let’s start!
On Today’s Menu:
⏳ Estimated reading time: 3 minutes & 12 seconds
🍔 DELICIOUS HAMBURGER: Crypto cross-bridges. Why do they matter?
🥗 SIDE SALAD: How many crypto exchanges might fall?
🥠FORTUNE COOKIE: Top 6 Crypto News around the web
DELICIOUS HAMBURGER: something you haven’t expected
Have you ever thought about cross-bridges in crypto? What are they? And why do they matter for security in crypto?
Most hacks happen while you try to transport your tokens from one chain to another. Watch this video to find out why cross chains are such a big target of hackers, and get some security tips on how to choose the right bridge for you.
HOW MANY CRYPTO EXCHANGES MIGHT FALL?
So… what do we have already? *in a suspicious voice* Celsius experienced enormous liquidity issues… Three Arrows Capital (3AC) has recently been revealed to be nearly insolvent…
Why should we care about that? Crypto exchanges are related to each other. It’s like a line of dominos on the table. Once you move one piece… Well, you know what happens.
And now we’re starting to hear about more and more crypto exchanges doing something. And that “something” doesn’t mean any good.
Many major exchanges announce freezing withdrawals, for example, already mentioned Celsius, Voyager Digital, CoinFlex, etc.; some exchanges are cutting down the number of their employees - BitPanda, BlockFi, Gemini, and others.
On top of that, since the bear market continues, investors move their assets to more centralized ones, and that leads to declining trading volumes. This ongoing sequence of events pushes crypto exchanges to major financial risks. And it is believed that many crypto exchanges might become insolvent after all. And then the real party might start. And it wouldn’t be fun. Insolvent crypto exchanges mean bad news for investors and their money. It would be gone. For good. Especially, if there is no ability to withdraw funds. Finito.
As I already said - crypto exchanges are related to each other. Every crypto exchange has more or fewer debts. And those debts are being paid with investors' money. And that money travels from one exchange to another. So… you see this connection there? It ain’t pretty.
And the best part about that: there are no regulations. No control. Vulnerability is thriving. There’s nothing investors can do, just embrace the chaos and try to weather it out.
But how did exchanges come to that point?
Maybe you remember those good times 6+ months ago. Prices were flying as high as birds do, and everyone was happy, even euphoric. Exchanges were very kindhearted to investors. Because why not take the chance and attract customers with generous yields for deposits?
Exchanges like BlockFi or Voyager promised more than 12% interest per year. I mean, banks would never offer such numbers, right?
So, more and more investors jumped onto the infinite hype money train. And it went well while the situation in the crypto market was good. And while prices went up. And while there was no Russia-Ukraine war or bonkers inflation rates.
…and now, everything is crumbling, euphoric momentum has completely disappeared and many investors are now sizzling to come out of this bear tsunami dry.
What could happen next?
Giant crypto exchanges like Binance, Kraken, or Coinbase, (at least) for now remain safe. Well, it looks like it. Though, there are some talks about them too, since doubt and fear are popular commodities among many.
One way or another, Sam Bankman Fried, the founder of well-recognized crypto exchange FTX, says that more crypto exchanges are going to fail.
“There are some third-tier exchanges that are already secretly insolvent,” says Bankman Fried.
FTX founder didn’t mention any specific names, but he claimed that for some exchange platforms “there is not much of a business left to be saved”. If you don’t get the idea of what exchanges the guy’s talking about - well, I don’t get it either. But these words are not that surprising after all. Everything falls little by little. Just like dominos.
Can Robinhood be next? Or Alameda?.. CoinFlex? The question remains open.
Owl’s takeaway: the situation is bad. How bad? Hmm, I’m almost 100% certain that more exchanges will definitely fall and only the strong ones will remain to stand… Even though it’s hard to predict, my bet is: CoinFlex will go down first.
TOP 6 CRYPTO NEWS AROUND THE WEB
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Disclaimer: This newsletter is strictly educational. None of this information is intended to be financial advice. Always do your own research and act responsibly with your profits.
very delicious news, thank you!