I have been following the FTX saga for the past 2-3days mostly on Twitter. You can follow Mario's Twitter account, he has held a couple of spaces discussing the matter. I consider it to be the number one space right on anything crypto. High-profile exchanges and individuals like Elon Musk, Cz_Binance, etc have spoken on the space.
Occasionally on Mario's Twitter space, we have had whistleblowers unpark some hidden truth about the FTX saga, coupled with a few conspiracy theories that have been proven to be true. So if you want a semi-unbiased view on the state of crypto you might want to join because there is so much to unpack, and this can inform how you play in this space moving forward.
From the conversations that have been had and revelations, it is safe to say that the crypto space is actually fucked–big time. So fucked I genuinely think we can see a 50% downtrend from where we currently stand, and the major culprits in this demise of the crypto industry are the CExs–centralised exchange.
Why?
Asides from the fact that some of these CEXs are insolvent, which fucks up the common man–you and I, most of the institutional money that has propped up the crypto industry for the last 2-4years has come from these institutions and will likely stop. Why? FTX–and other popular CExs–
are institutional exchanges, meaning most of these top institutions have their treasury held by these CExs in line with government policies. We are seeing a few of these CEXs capitulate after the FTX saga and many more are going to follow suit.
These institutions have more reasons not to invest in cryptocurrency and the laws guiding their operations within the crypto space will be reviewed. Until that is done to protect their interest little to no institutional money will make it into this space. The few that are still here will cut their ties and make do with whatever they can from these CEXs.
Secondly, most crypto projects that have their funds tied to these exchanges are going to die a sudden death–which is already happening. This in turn impacts innovation which is the driving force of this industry. This is expected in a bearish run–bad projects are supposed to die but this time around many good projects are going to follow suit due to their involvement with CEXs.
What we are currently experiencing in the crypto market is the impact of the FUD due to the news surrounding FTX and other crypto exchanges. The impact of their actions is still yet to be felt. We will see that play out in the next 2-6 months as we uncover some of the irregularities in the crypto space, after which comes the heavy hand of the regulators.
As CZ and other crypto experts have stated, this FTX saga has set back the crypto industry by a few years. Depending on how this FTX case goes, we can see an almost total collapse of the crypto market or a possible chance to restructure the exchange. So it's not looking good on any front. Anyone telling you otherwise is either lying or in denial.
Currently, I am removing crypto from my short-term plans. I cannot bank on making a substantial income from this space. Thankfully, I don't have much in crypto, it would have been devastating, to say the least. I can only talk about this casually because I am not affected, but for the many individuals who have lost their money or source of income due to this saga, I can't begin to imagine how difficult it might be for them. Upholding the ethos of decentralisation is the last thing on their mind.
Most people like to speak on the ideals of decentralization, discarding the need for more regulations ( especially the operations of CEXs) and I consider that to be very disingenuous. Decentralisation means nothing in the grand scheme of things if the ordinary man can be fucked over in the manner they've been in the past few days. You cannot disregard the role CEXs play in this industry. Cryptocurrency has gained mainstream attention because of CEXs and they are the first line of contact for many new entrants into this space, so there is a need for more/better regulation of their activities.
It's almost important to state here that many of the big players in the crypto space (like CZ) were aware of these irregularities in this sphere for a long time and refused to speak on it–even CZ has a tweet to back this claim. There is absolutely no way any sensible person would want to be involved in crypto currently. There is little to no argument in favour of crypto right now. Asides from this FTX saga, there are so many bad practices in this sphere that need to be stopped (this is not something I can unpack in this post). This industry isn't transparent and that needs to change.
But there is DeFi/Dex?
DeFi isn't without its bottlenecks. I have been in this space for quite some time and I can say categorically one of the easiest ways to lose your money is via DeFi protocols, which are susceptible to hacks and other irregularities. I won't even touch it with a long stick. Also, the level of technicality/knowledge needed to navigate this space is greater than average.
Crypto is inclusive, not exclusive. We should not embrace some parts of this industry and disregard others. CEXs are important; DEXs are important. There is a part of the crypto industry that should be regulated, and there is a part of the crypto industry that cannot be regulated. There is no one-side-fit-all solution. We need to be holistic in our approach to creating a balanced sphere where institutions, retailers, and every stakeholder irrespective of their technical know-how can feel safe to operate.
NO MONEY NO INNOVATION
Capital plays an important role in the development of any industry and crypto is no exception. Currently, that cash flow has been tampered with and institutional confidence (and even that of the retailers) are at an all-time low. Most institutions want their money out of crypto.
The only people saying otherwise are those with a negligible amount invested in this space that does not in a way affect their lives. For those who have been hit hard, they are demanding justice and more transparency in this space and until those demands are met, I do not see the crypto space moving forward in any tangible way.
CONCLUSION
My convictions about the crypto space for the past 6-12 months have been mixed. This industry has greatly impacted my life (positively), but the future isn't looking quite convincing to me. This doesn't mean that there won't be opportunities for many individuals. However, the industry is not operating as it was designed to and I will blame this on the human factor, as we as a species have the propensity to pervert anything, and I suppose this is what's happening with crypto currently.
