Cryptocurrencies about to crash again?
How will the cryptocurrency industry fail? Very slowly, the all at once.
Bitcoin prices are far off of their peak, but they've been relatively stable these past few months.
However, that isn't a true picture of the environment.
While prices seem to be locked in (the DoJ suspects price rigging), the entire cryptocurrency infrastructure, carefully built up over 10 years, is collapsing in a space of months.
Silvergate is (was?) the bank in crypto. It counted some of the industry’s biggest firms (in the U.S.) as its clients. The fact it’s now in a position where it may soon fold is not a good signal for the rest of the industry, and gives regulators a prime example of what happens if the banking sector gets too close to crypto.
Federal regulators are actually trying to prop it up, because they fear what will happen if Silvergate implodes.
Interestingly, the government is actively trying to get out of the cryptocurrency market at the exact same time, by selling a stockpile of seized bitcoins on the open market. Some in the government see a collapse happening soon.
Now, the former chief of internet enforcement at the U.S. Securities and Exchange Commission (SEC) has predicted FTX rival Binance, the world's largest crypto exchange, could see a run on deposits—potentially causing "devastating investor carnage."
Crypto is running out of banks, and it is running out of major exchanges, because of hacks and fraud.
Hackers alone have stolen more than $3 Billion in crypto in just the past year, and fraud is far worse than hackers.
As Gomer said,
Twice bitten, permanently shy.
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