FTX is done — What’s next for Bitcoin, altcoins and crypto in general? – Cointelegraph

2022 was a tough year for crypto, and November was especially hard on investors and traders alike. 

While it was incredibly painful for many, FTX’s blowup and the ensuing contagion that threatens to pull other centralized crypto exchanges down with it could be positive over the long run.

Allow me to explain.

What people learned, albeit in the hardest way possible, is that exchanges were running fractional reserve-like banks to fund their own speculative, leveraged investments in exchange for providing users with a “guaranteed” yield.

Somewhere across the crypto Twitterverse, the phrase “If you don’t know where the yield comes from, you are the yield!” is floating around.

Who would have known that a few ill-timed bank runs would pull down the entire house of cards by proving that while exchanges appear to have high revenue and tons of tokens on their books, many are completely unable to meet user withdrawal requests?

They took your coins and collateralized them to fund highly speculative bets.

They locked your coins in centralized DeFi platforms to earn yield, some of which they promised to share with you.

Not your keys, not your coins.

Never has the phrase rang truer.

Let’s explore a few things that are happening in the crypto market this week.

If the number of insolvencies and “temporarily pausing of deposits and withdrawals” messages continue to pop up over the next few weeks, it seems likely that this trend of coins leaving exchanges and popping into hardware wallets will continue.

Of course, what DeFi and DEXs need are a more transparent framework and processes that ensure user funds are safe and being used “properly.”

Currently, Ether’s price looks a bit soft from a technical analysis standpoint, and the recent news about the FTX thief holding the 31st largest Ether spot position, plus concerns over censorship, centralization, the United States Office of Foreign Assets Control enforcement on this “whale” and other Ethereum-based protocols that have exposure or bankruptcy proximity to FTX and Alameda could stir up a bit of FUD that impacts the altcoin’s price action.

Top 10 addresses with the largest ETH holdings:

Uncertainty on when the Shanghai upgrade will be enacted and investor concerns about when staked coins can actually be withdrawn are also interesting conversations that could turn short-term sentiment against Ether.

The thesis is pretty simple. ETH has held support around $1,200–$1,300 pretty well through all of the previous months of bearish market developments, but will the potential challenges mentioned above lead to a test of the level again?

Stakers are essentially spotted long and earning yield, so at this juncture, opening a low-level short position with taking profits orders at $700–$600 could possibly be rewarding.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.


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