FTX walked away from a deal with Celsius after seeing state of its finances
Crypto exchange operator FTX was going to buy Celsius, which has been struggling ever since they froze withdrawals. After looking at the $2B hole in their finances, they walked away.
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So much for passive, stable returns on your cash.
I thought of including "stablecoin staking" into my portfolio, but after all this I think I'll stick to good ol' ETFs/index funds. And add some crypto as a long-term, unstable bet that may crash or might be wildly successful in the next 10 years.
It just sucks that they all advertisers these stablecoin staking platforms as, well..."stable". This proved there's nothing stable about them.
Yeah, there's no coming back for stablecoins after what happened with Terra.
A lot of these stablecoin investment funds were just overleveraged crypto banks without much understanding of risk. Although not a good thing for investors, those with a stomach for volatility will probably see huge returns if they are diversified well and don't sell in times like these. Just look at the long-term volatility of BTC since inception. Almost every cycle it has a peak to trough drawdown of 90% https://iconicholding.com/bitcoin-volatility/. Why would other coins suffer less than this? Sure, there's no guarantee this pattern will continue, but what are your long-term options? The dollar is doomed because of inflationary pressures, the yuan is too strictly controlled and the ruble supports an economy entirely dependent on one aging human. I'll take my chances with crypto but will be actively managing my risk.
Fair enough!
Regulation isn't the answer, but I'm sure everyone is still going to use Celsius as an example of the need for regulation in the crypto industry, which I completely disagree with.
The problem isn't regulation, the problem is that institutions are trying to hold crypto on behalf of people. There's no hope of being bailed out, it's every man for himself out there and when things go south not everyone is able to make it through.
Another point, traditional hedge funds and firms are available to diversify their investments, and so it's rare they are so vulnerable to the demise of any single asset. Crypto funds, on the other hand, are reliant on the market conditions of Bitcoin, and Bitcoin alone, to survive. We're seeing now this strategy doesn't work, and the solution isn't to "de-risk" the investment by buying alt-coins. It's to not get involved with lending crypto in the first place.
Totally agree that regulation isn't the answer.
Man, crypto is really struggling these days. Though to be fair, it seems like FTX is doing just fine.
So according to the article, Celsius is fighting against bankruptcy, but last year it raised $750M and was valued at $3.5B... WTF 🤯
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