When you turn on any centralized financial news outlet following the FTX Exchange collapse and the story seems to be the same, crypto is dead. For new traders, this line of thinking can be surprising but for experienced crypto veterans, this is normal following a major hack or collapse. Normally, concerns about longevity by new traders arise facing a mountain of bad press and the FTX fiasco is no different.
The FTX collapse is being called one of the worst moments in crypto history. The exchange was valued at +$32B in January 2022. Now, the company is bankrupt, there are +$2B in customer funds missing, and the CEO and executives are under criminal investigation for their handling of funds. Either way, you slice it, this moment is not a good look for the crypto sector by any means.
Some analysts are saying it’s like the cryptos Lehman Brothers incident. This reference referred to when the Lehman Brothers collapsed and it caused a domino effect throughout the centralized financial market. This is a valid comparison as FTX and its hedge fund, Alameda Research, had over 100 subsidiaries and even more partnerships. Now, these firms are facing near guaranteed bankruptcy due to their business entanglements with the group.
Crypto is Here to Stay
Despite all the bad press, the advantages of direct p2p commerce are too much for the market to ignore. As such, crypto will not be going anywhere for the foreseeable future. However, despite its advantages, there are some serious concerns the FTX Exchange collapse has brought to light. Here is what you can expect to see as a crypto trader in 2023.
What the FTX Collapse Means for the Market
When you take moment to examine the actual effects of the FTX crash on the market so far, you realize there’s allot of data to unravel. The FTX crisis can be equated to losing a supporting wall in your house. At this moment the entire structure is weaker because of how many businesses and users depended on FTX.
One thing that can be said with certainty is that the FTX implosion will lead to more bankruptcies in the market. Notably, these are major firms and industry leaders that are being discussed. For example, the popular blockchain lending firm BlockFi filed for bankruptcy this month citing their close financial ties to FTX.
Analysts predict that there will be a waterfall effect of companies that were either financially or technologically backed by the group. Additionally, the sudden loss in value across the entire market will lead other finally irresponsible platforms to come under pressure. Specifically, firms that list their utility token as reserve assets are feeling the crunch.
Bad Accounting Leads to Problems
These companies and projects are learning the hard way that this accounting strategy can lead to devastating results. A better solution is to decouple the project from the volatility of the crypto market using safehaven assets like META 1 Coin. This advanced token derives value from a basket of gold-related assets rather than other cryptocurrencies.
The strategy brings some major advantages. For example, META 1 Coin receives a bump in demand during times of market volatility. This added demand is because gold is in higher demand during market uncertainty. Additionally, this structure provides a long-term store of valuable benefits such as self-appreciation.
One of the biggest losses the market is going through right now is the general consumer district. If you thought it was difficult explaining cryptocurrencies to your family before, get ready for a mountain of negative press talking points. People who don’t understand the technology and benefits of cryptocurrencies can be easily swayed when hearing of major losses from fraud or hacking.
The sad thing is that consumer distrust is easy to sow but hard to eliminate. With some people losing their life savings on FTX, there are a lot of people telling heartbreaking stories about their crypto losses. The thing to remember is that there are plenty of ways to avoid the losses that FTX users incurred. Non-custodial DEXs and wallets are two options experienced traders would recommend.
More Non-Custodial Wallets and Exchanges
Every time a large CEX gets hacked or goes under, there is always a soft grown from the underbelly of the crypto community. For years, crypto experts have warned users to not leave their tokens in the custody of exchanges. They have made saying such as “not our keys not your coins” and much more.
However, no matter how many times the lesson is preached from the highest mountain peak, there will always be people who find leaving their crypto in others’ custody to be sufficient. There is a common misconception that CEXs are all regulated and insured. However, this is not true and depends on the region and type of exchange.
For example, exchanges like Coinbase or Gemini are licensed in the US. These firms have to meet strict regulatory guidelines. As such, they are ideal for institutional investors seeking an insured and protected trading experience, but are a bit overkill for the average trader. Where the confusion falls is when you have exchanges like FTX, that look and feel like regulated CEXs, but that are operating in locations with lax regulations like the Bahamas.
Don’t get Separated
This latest lesson will teach at least a few crypto traders why it’s so important to leverage non-custodial protocols. There has already been a major rise in users downloading non-custodial wallets. The platform Trust Wallet reported a 300% uptick in downloads following the FTX crash.
The main advantage of a non-custodial protocol is that your tokens never leave your possession. This approach means that you are the only one to ever have access to your crypto until your trade completes. This structure eliminates delays due to hacks, updates, or even bankruptcies. If you are reading this and don’t use a non-custodial wallet to store your crypto, you need to download one now.
It’s no surprise to learn that those regulators are salivating to get into the crypto market. This latest round of losses has left consumers screaming at the top of their lungs for some repayment. How FTX carelessly wasted billions in customer funds has those who took losses furious at the inability to recoup these funds.
These users are reaching out to lawmakers to get some sort of help to retrieve their crypto. In response, regulators are sharpening their knives preparing to tackle the crypto industry. SEC Chair, Gary Gensler, has publicly stated that regulators will go after any crypto company they find acting outside the law.
Crypto regulations can be a double-edged sword. Pro-crypto regulations such as the ones found in Switzerland or El Salvador can be a great way to make crypto usage safer for everyone. These locations are seeing billions in profits from their pro-crypto legislation which welcomes technology and innovation.
Reversely, anti-crypto regulation can have devastating effects on the market as a whole. You can look at China’s anti-crypto stance in 2017. When China announced that it would ban all exchanges from the country, it led to strong market retractions. Of course, just like this correction, the incident was temporary and the market rebounded to hit new all-time highs.
More Transparency CEX
Recognizing that changes are on the horizon, other crypto exchanges are seeking to beat regulators to the punch. It’s common for crypto companies to self-regulate as a way to gain access to a market. These firms will follow all regulations available, even if not required, to build confidence in their operations. You can expect to see this approach from other major CEXs.
Two of the world’s largest CEXs are already doing damage control. Binance, the world’s most popular exchange in terms of trading volume, has pledged +$1B to help keep the industry afloat. Additionally, the firm announced it will now use a Proof-of-Reserves system which enables anyone to check their reserve values 24/7. The exchange also stated that it would be leveraging third-party auditors more frequently s part of its open transparency movement.
Coinbase, the largest CEX in North America has also stepped up its efforts to remain transparent recently. The firm took to social media to show its users that the FTX situation would never happen to Coinbase. The post showed that Coinbase has 100% of customer funds in reserves. The post went on to say that they don’t lend or trade customer funds like FTX.
How Low Will it Go
The current state of the market has many traders wondering how low market values will go. Some of the top-performing cryptos in the market were already reeling from another major collapse earlier in the year. That incident occurred when LUNA/UST failed after a whale trader dumped 5% of the total circulating supply on the market.
Networks like Bitcoin are down +63% from all-time highs. Additionally, the crypto market as a whole is down $1.6 trillion in value with some predicting even more losses in the coming weeks. Despite all of this doom and gloom, there are some rays of hope shining through the crypto winter storm.
Focus on Building Real Value
Many developers are taking this time to tell others that this is why it’s vital to focus efforts on creating real usability with their technology rather than speculative assets. Projects that have long-term usability don’t fear market volatility because they have a larger purpose rather than just securing traders’ funds.
One type of blockchain asset that continues to shine throughout the entire FTX fiasco is safehaven tokens. Safehaven tokens are next-gen stablecoins. They derive value from third-party assets so they aren’t volatile. Additionally, they integrate special smart contracts to prevent volatility and centralization.
META 1 Coin
META 1 is the perfect example of a fourth-gen safehaven token that is in use today. The project’s founder Robert P Dunlap is considered a freedom fighter by many. His dream was to create an open and transparent economy that would enable anyone to build long-term wealth.
META 1 integrates a host of special mechanisms to prevent major losses from whale dumps and manipulation. For example, the network makes all traders prove they are individuals and not trading firms or corporations.
This protection ensures that the METANOMICs DeFi market remains a community-led effort. When you review market manipulation in the past, it’s obvious most whales are corporations or trading firms. These groups have many tactics to swindle regulator traders out of their coins. Eliminating them from the economy is a smart way to ensure more decentralization.
Of course, you can never trust that some of these groups won’t lie and attempt to sneak into the market anyway. As such, there is a $5M token limit on all individuals. This token limit ensures that a firm can’t act like an individual to userp the community.
Another cool feature that META 1 Coin integrates that isn’t found on any other network is an asset protection system. This mechanism scans the market for all META 1 Coin trades. The system cross-references the value of the trade against the asset value of the token. No trades below the minimum asset value are approved. This strategy ensures that whales can’t dump their bags and tank the META 1 Coin value.
One of the main advantages of META 1 is its access to low-risk passive rewards. The system integrates a high-yield savings account. This account pays out 10% APY to savers. This rate beats the current inflation rate. Additionally, it dwarfs what your fiat bank account currently pays out. The national average for fiat savings accounts in the US is only 0.03%.
The META VAULT is open to anyone regardless of your region or beliefs. The system was designed to be easy so new users could navigate the features and services with confidence. Additionally, it comes with a crypto debit card option that makes it easy to spend your rewards at all of your favorite retailers.
The META 1 MasterCard Debit is one of the coolest DeFi features in the market. Users can spend their crypto at any retailer that accepts MasterCard. The system works by converting your META 1 Coins into fiat currency when you swipe the card. The process takes seconds. Best of all, the retailer gets fiat currency and is unaware of any of the crypto used on the backend.
FTX 0s Gone – Crypto is Herer to Stay
The main thing to remember is that FTX didn’t represent the entire crypto market as a whole. There are tons of awesome projects that are stills seeing growth and development. Additionally, the other vital lesson is to stick to non-custodial platforms to prevent the same incident from occurring to your holdings. If you follow these simple steps, your crypto career will be long and safe.