The Fallout Of FTX Impacts The Future Of Cryptocurrency

The cryptocurrency industry was seeing a rise until recent years, and people were hopeful that their investments would lead to significant returns in the future. The industry has experienced a dramatic market crash, and it is still unclear whether it will recover.


Liquidity problems have contributed to many bankruptcies, and big-time companies have been unable to continue their operations. FTX was known as the leading crypto exchange at one point, but it also collapsed, leading to many questions about the future of cryptocurrency.


The Future Of Cryptocurrency


FTX collapsed due to a lack of assets in its balance sheet. After the collapse, customers began withdrawing their investments of up to $650 million.


Following this event, some rumors came to light that FTX was involved in sketchy activities, and its downfall created a lack of confidence in the crypto scene. Eventually, the crypto market experienced major losses of $2 trillion, leading to many uncertainties about the industry’s future.


Crypto lenders seem to be why the industry has suffered such a massive hit and continues to do so. Like how customers earn interest on their savings from banks, crypto lenders also offer customers a chance to earn returns. These returns are sometimes higher than banks at a whopping 20%.


Now that evidence has come to light that crypto lenders cannot offer such sustainable returns, people are withdrawing their money and losing faith in the industry. If people don’t invest and deposit their digital assets at these lenders and exchanges, the firms will not generate any profit and be driven out of business.


Another reason for people’s skepticism and reservations about depositing money with crypto firms and lenders is due to the lack of regulations around customers’ digital assets. Banks have strict rules and policies on how much capital they can hold and what they can do with their customers’ money, making them a much safer option than investing in cryptocurrency.


Bitcoin and ether will likely survive this fallout since their numbers are still relatively high compared to 4-year-old statistics. In the future, there will likely be more regulations, and many illegal activities will be weeded out with time.



Why Has the World Become Disillusioned by Crypto Following the Fall of FTX?


FTX’s sketchy activities using customers’ funds made it clear that even the top crypto firms could not be trusted. These companies were also interconnected, meaning they were in on using customer money for risky bets, which is a deeply immoral act. As people have begun withdrawing their money and worrying about its safety more likely other companies’ sketchy activities will also come to light.


Final Notes


The cryptocurrency industry will likely survive in the long run, but many significant changes must occur to recover people’s faith in lenders and firms. Despite the setback, the highest-ranked digital currencies, bitcoin, and ether, are still doing well compared to 2018. You can expect many tokens not to survive, and there will be significant changes occurring soon.